June 10, 2020
We don't have to tell you how uncertain everything is right now. Normally, when travelers want to assuage anxieties about the future, they can buy insurance.
But even travel insurance is in flux at the moment.
Newcomers to this kind of coverage are being introduced to the concept at an unusual time. In typical years, a garden-variety travel insurance policy would cover you for most calamities that could happen on a trip—a broken leg, lost luggage, or a vendor going bust. And those unfortunate events are usually still covered.
However, insurers are now explicitly excluding the thing we're most worried about: the pandemic. From an underwriter's point of view, that makes sense—it's a risk that we all expect and that cannot be controlled—but from a customer's point of view, it can feel like the new rule makes travel insurance pointless.
Not so. Travel insurance is more important than ever. You just have to navigate it differently.
The rise of CFAR
In Ye Olde Times of travel insurance (i.e., 2019), springing for a "Cancel for Any Reason" (CFAR) clause was something few of us did, mostly because it's one of the most expensive add-ons to a policy. Most travel insurance costs 4%–10% of the overall price of a trip, and CFAR adds 50% to the price of a basic policy.
But the extra cost is worth it in times like these: CFAR lets you cancel travel and request a refund no matter your excuse—even if you're simply not in the mood to go anymore.
Fear of travel is not something an insurer will otherwise let you cancel a trip over. But with CFAR, a health concern definitely qualifies as a legitimate excuse.
The head of one policy comparison site, Aardy, told consumer reporter Christopher Elliott that before the pandemic, only 5% of customers purchased CFAR at the time they bought their policies. Now, half of customers do.
Why? Because CFAR coverage supplies the level of protection that most of us want the most right now. It allows you to back out of vacation plans and still get money back.
That said, most CFAR policies don't let you get 100% of your money back—they set a minimum reimbursement at around 75% of your costs. That still leaves a chunk of change you won't see again, but it beats a cancellation that isn't protected at all.
Just make sure before buying that a CFAR policy doesn't exclude pandemics—yes, unscrupulous insurers could slip exclusions into CFAR policies, which would technically mean you bought Cancel for Almost Any Reason insurance. Read the fine print: The General Exclusions and Unforeseen Events sections are usually where you'll find the loopholes.
Lots of insurers yanked their CFAR options when the pandemic began, but there are still enough being offered to make this a viable choice—and more insurers will bring CFAR coverage back as the worldwide tourism industry kicks into gear again.
Covering your health
The other big thing we're looking for in a travel insurance policy is health care.
At first, most of us will be traveling domestically because so many foreign countries aren't letting Americans in. And if you're traveling domestically, your existing health insurance probably covers you. (Check to make sure.) But if you don't have health insurance at home, or if you need it to be better, you can always augment your coverage with travel insurance.
If you're traveling internationally, though, health coverage is more crucial than it has ever been. The usual accidents and illnesses can still happen, but now there's also Covid care to factor in. These are nationalistic times, and to be safe, you want to know you'll be able to access the health care system in a country that isn't yours. Proof of an ability to pay can open those doors.
You want a policy that ensures you'll have coverage in the best hospitals wherever you are and that will also pay to send you home. Air medical transport can be guaranteed through companies like Medjet.
Read the policy carefully before buying, because if you come down with the coronavirus, some insurers will only cover health assistance, not health care—meaning they'll refer you to doctors and evacuation services, but the insurer won't pay for them. We all hate reading the Terms and Conditions section, but it's vitally important to know what's included before paying your premium.
Watch out for capped maximum payouts, too. Covid-19 can linger in your system, causing havoc for weeks and even months, so you want to make sure your coverage would provide enough funds for an extended medical stay, should that be necessary.
A few other questions that have arisen during the Covid-19 pandemic:
If the U.S. State Department advises against travel somewhere, can I cancel and get reimbursement?
Not generally for that reason alone. But try to get a refund from the travel operator that sold you the vacation. If that fails, you might then be able to get your travel insurer involved.
If my airline cancels my flight, can I get reimbursed?
Yes. If you cancel, you only are entitled to a credit or voucher, but if the airline cancels or changes your flight schedule to something too difficult to manage, you are legally entitled to a refund from the airline. Go to airlines before going to your insurer.
I had insurance for a trip I didn't take. Can I apply my coverage to the postponed trip?
Usually. The insurer will re-price the trip based on the new dates, though, so you may have to pay a little more after the premium is adjusted. You won't get a refund.
If I get sick with Covid-19 and my insurer excludes pandemics, does that mean I get no health coverage?
Check your policy. Most of the time, you can still get health coverage. If you get sick before your trip and don't take it because of that, the Trip Cancellation rules will probably still cover the cost of your vacation. Most pandemic exclusions concern monetary losses caused by a pandemic—but if you get ill, most policies that include health coverage will still cover your health expenses. But read the fine print, because each policy is a little different.
Will travel insurance cover my expenses if I am quarantined on vacation?
Probably not. Some policies issued before the pandemic took hold covered quarantines, and insurers are slowly adding provisions to policies that will allow similar coverage in the future, but generally speaking, quarantine is a blind spot in most policies. However, quarantines are explicitly covered by some trip insurance policies that automatically apply to credit card purchases. If your credit card offers automatic trip protection, look into it—you may be covered and you didn't even know it.
My cruise changed its itinerary and now I don't want to go. Am I covered?
Not with a standard policy. Cruise lines are permitted to change ports as part of the purchase contract made with passengers, and travel insurers won't reimburse you for itinerary changes unless you purchased a CFAR policy or a premium-level product that explicitly allows for reimbursement in that case.
Read more Frommer's advice about travel insurance: