Faced with travel bans, quarantine orders, and cancelled trips, many people are experiencing firsthand just how important travel insurance can be. As a group travel leader, you want to make sure your travelers and their investment are protected, but not all coverage is created equal. In planning for future travel, here’s what you should know about your options and how the insurance industry could change in the wake of the coronavirus pandemic.
Familiarize yourself with the different types of coverage
As some travelers have discovered the hard way, cancelling a trip for fear of getting sick is usually not covered under standard policies. That’s why it’s important to examine the most common types of travel insurance and how much coverage they provide. Most companies offer different plans or tiers providing varying levels of protection before or after departure. (This post goes into more detail.) In particular, travelers are likely to show an increased interest in CFAR—“cancel for any reason”—coverage, which provides partial reimbursement (typically 50-75%) for cancellations at least 48 hours before the departure date. CFAR is often the most expensive but also the most flexible option, though experts predict companies could soon impose stricter terms.
Talk to your travel provider
In addition, you should have a clear understanding of your group travel provider’s safety protocols, risk management standards, and cancellation policies. How are they equipped to assist your group if something goes awry in the field? If a participant needs to cancel before departure, what are the deadlines and penalties? Some travel providers purchase some form of insurance on behalf of their travelers, or offer the option as an added cost. Armed with this information, you can help your participants assess whether supplemental coverage is needed.
Read the fine print
When comparing policies, whether from your travel provider or purchased directly, going forward it will be more imperative than ever to carefully read all fine print and ask questions if necessary. Make sure you have a clear understanding of the policy’s terms, and specifically any exclusions. For example, coverage could be affected or invalidated by government-imposed travel bans or advisories, certain weather events or natural disasters, or pre-existing medical conditions.
Here are some additional questions to consider as you evaluate policies:
If our organization chooses to postpone our trip, does the insurance policy allow for date transfers? How far in the future can we shift coverage? Are there circumstances where the insurance company will require us to reuse premiums instead of refunding them?
Could a CDC alert or a government-issued travel advisory, warning, or ban affect or invalidate coverage?
How does the policy define a "force majeure" or Act of God, and would the policy cover such an event?
After a participant makes their initial deposit, how much time do they have to purchase a policy? (All companies have restrictions, and some have already or will soon tighten these windows.)
If your participants receive a refund, credit, or voucher from the travel provider or airline for a cancelled trip, how does that affect their claim reimbursement?
What are the guidelines for submitting a claim? What kind of documentation needs to be provided, and when?
Know that things will soon change
Right now, insurance companies are scrambling to process a flood of claims; in trying to mitigate their own risk, the policies they issue in the future are likely to be more restrictive. While no one has a crystal ball, we can look to past major events like the 9/11 attacks and the SARS epidemic, both of which resulted in industry-wide changes, for an idea of what’s to come. Some sources predict that:
Travel insurance may become more popular but could also become more expensive.
Newly issued policies may have tighter restrictions and may add wording specifically referencing quarantines or stay-at-home orders.
Companies may change CFAR terms to be stricter or even eliminate the option altogether.
Some companies may offer expensive pandemic riders or limit payouts; others may exclude pandemics from their coverage altogether.
Companies may offer a la carte products, allowing travelers to build a custom policy from a menu rather than pre-bundled products.
Remember this is an extreme circumstance
COVID-19 has exposed how gaps in coverage could leave your group stranded during an already stressful time, but it’s helpful to remember that this current pandemic is not the norm. In the long run, travelers are more likely to be affected by other, more mundane mishaps where they’ll benefit from insurance coverage. Lost baggage, a missed connection, or a sprained ankle can all detract from your group’s experience, and for these types of incidents, insurance coverage is unlikely to change drastically.
This is a rapidly evolving situation, and the information provided here is subject to change. If you have questions about a specific travel program or insurance policy, please contact your provider directly.