Short-term

March 25, 2020

Travel insurance by itself is not the solution for COVID-19 cancellations

By: Christelle Colman, Insurance Expert at Old Mutual

Understanding and drawing on the cancellation, refund or insurance covers of all operators in the travel value chain offers victims of COVID-19 cancellations the best option to spread their risk, increasing the chances and value of settlement.

Now that COVID-19 has been declared a global pandemic it is simply not possible to travel internationally. If travellers have a flight booked, “you don’t have a choice, you have to cancel,” says Christelle Colman, Insurance Expert at Old Mutual.

The good news is that if you have purchased travel cover you can claim.

The bad news is that, “the amount that you can claim is not likely to cover your full loss,” says Colman. There is also a range of technical hurdles that may make submitting a successful claim a challenge.

The best option is to, “understand the detail of your own travel cover while developing a thorough and complete picture of the covers, refunds and cancellation policies of all the other operators involved in your trip,” says Colman.

<h3>Red flags and opportunities to watch out for:</h3>

Cancellation for fear of sickness or pandemic is most likely not covered

Travel policy holders can only call on their travel insurance, “if operators themselves cancel bookings, public transport is officially shut down or countries go to into official lock down,” says Colman.

Disinclination to travel, even for the reason of a pandemic, is unfortunately excluded by most polices.

While specific ‘cancellation for any reason’ benefit can be purchased this is generally only available on more expensive polices and on specific request.

Travel insurance generally only covers 50% of the cancellation costs incurred

Policy holders should do their utmost to, first, recover as much as they can from airlines, accommodation establishments, tour operators or any other service providers in the travel value chain. “Most of these have their own cancellation policies and may well cover larger portions of your loss than the 50% that your travel policy covers,” advises Colman.

While every operator has their own cancellation policies and many are structured to avoid having to pay out, “it often makes sense to pay a little extra for tickets or accommodation and tour options that include an element of cancellation cover,” advises Colman.

Since the majority of travel insurance policies only cover 50% of loss, only fall back on your travel cover as a last resort.

Travel insurance only covers sudden and unforeseen events

It is important to understand that travel insurance policies don’t cover loss incurred as a result of a known event or circumstance. “If the COVID-19 epidemic was generally known about – even if only then in China – at the time that you purchased your ticket, you may not be compensated,” says Colman.

Short term insurance is based on the premise that claims must be for fortuitous events only. “Taking out a travel policy after the pandemic had become known will not give you the cover you may be seeking,” says Colman

Successfully lodging cancellation or curtailment claims requires proof

Travelers lodging claims should be aware that they will be required to:

<ul><li>Prove all payments made for travel costs.</li><li>Provide confirmation from travel agents, airlines, hotels and tour operators that none of these provide their own refunds or cover.</li><li>Prove the value of cancellation fees or penalties if applicable.</li><li>Provide medical reports or a death certificate (or both) justifying the cancellation.</li><li>Provide proof of any other additional travel costs incurred in the event of curtailment.</li></ul>

Similarly, claiming for illness while travelling requires:

<ul><li>A record of diagnosis and detailed medical report from the presiding medical practitioner abroad.</li><li>Contact details of the Medical Practitioner.</li><li>A medical report from the South African medical practitioner who managed the patient once home.</li><li>All invoices and receipts of expenses incurred.</li></ul>

In short, keep a meticulous record of all booking, cancellation policies, treatments and other expenditure when planning as well as during a trip, especially if you fall ill.

“The more proof and information you have the better when it comes to claims,” says Colman.

Postpone rather than cancel travel

Most airlines, accommodation establishments and tour operators allow clients to postpone their travel until after the COVID-19 pandemic has subsided,” says Colman. While terms differ between operators, postponing or receiving a credit note to use at a later date – even if there are penalties or rebooking costs – “might be a better way to limit loss compared with outright cancellation,” advises Colman.

Travel insurance only applies to travel and risk outside South Africa

If you contract COVID-19 while travelling abroad, you cannot rely on your travel policy to cover tests and treatment on your return to South Africa,” says Colman. Once home, South Africans will need to rely on their medical aids or their own pocket for treatment of COVID-19.

Additional travel insurance purchased under the specifically requested extension covering ‘cancelation for any reason’ needs to be purchased within 48 hours of buying a ticket

As many travellers are discovering, purchasing an extension on their travel cover – covering cancellation for any reason – only applies if this cover is purchased within 48 hours of ticket purchase. While this condition appears in the small print on the policy and on most insurers web sites, “this is often not fully explained or understood when people purchase this extension,” warns Colman.

In pandemic conditions travel insurance may not cover overseas medical treatment

Travel policies generally cover both medical expenses as well as any other costs associated with treatment abroad.

In the instance of pandemics, however, most travel policies only apply for, “the first five days after the pandemic is officially declared - provided your ticket was purchased before the declaration of pandemic,” warns Colman.

Travel insurance will not cover extended accommodation costs as a result of COVID-19

Travellers stranded in a foreign county in COVID-19 lock down will need to find accommodation for the period of the lock down. In many cases this could be for months at a time. “Emergency accommodation and sustenance costs are not covered by most travel policies,” cautions Colman.

The best that people who made arrangements to travel over the next few months can do is to research the entire value chain that they have engaged, “first drawing on the specific cancellation or postponement polices of each of the operators in this chain,” advises Colman. These may well pay out more than 50% of the loss, or at least allow postponements or provide credits for future use at limited cost. Only when all these options are fully exhausted should the remaining loss be presented – with all supporting documentation - to the travel insurer.

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