Travel insurance provides two types of cover for travellers for the coronavirus epidemic: medical cover if contracted and cancellation cover if travel is cancelled. The cover is subject to conditions.
The travel insurance cover
These are select extracts from the Allianz Group Product Disclosure Statement (PDS), which illustrates the travel insurance policy cover:
Overseas Emergency Medical and Hospital Expenses cover
We will reimburse the reasonable medical or hospital expenses you incur until you get back to Australia if you injure yourself overseas, or become sick while overseas.
Cancellation Fees and Lost Deposits cover
If your journey is cancelled, rescheduled or shortened because of circumstances that were not expected or intended by you and are outside your control then we will pay:
a] your cancellation fees and lost deposits on unused travel and accommodation arrangements that you have paid in advance and cannot recover in any other way;
b] your travel agent’s cancellation fees;
c] for the value of frequent flyer points, air miles, loyalty card points, redeemable vouchers or other similar schemes lost by you;
d] your reasonable costs of rescheduling your journey.
General Exclusions for both the medical and cancellation cover
We will not pay if:
- [the epidemic exclusion] Your claim arises from, is related to or associated with: an actual or likely epidemic or pandemic; or the threat of an epidemic or pandemic. Refer to www.who.int and www.smartraveller.gov.au for further information on epidemics and pandemics; or
- [the travel advice exclusion] Your claim arises from, or is associated with, travel to countries or parts of a country for which:
1 a]. an advice or warning has been released by the Australian Government Department of Foreign Affairs and Trade or any other government or official body, and
1 b]. the advice or warning risk rating is “Reconsider your need to travel” or “Do not travel” (or words to that effect) or the advice or warnings advise against all non-essential travel to or in that location or advise against specific transport arrangements or participation in specific events or activities, or
2. the mass media has indicated the existence or potential existence of circumstances (including circumstances referred to in 1 a] and 1 b] above) that may affect your travel; And
3. you did not take appropriate action to avoid or minimise any potential claim under your policy (including delay of travel to the country or part of the country referred to in the relevant advice(s), warning(s) and/or mass media statement(s)).
Circumstances, in this case, includes but are not limited to strike, riot, weather event, civil protest or contagious disease (including an epidemic or pandemic).
Travel Alerts / Travel Advice
When an event such as a strike, riot, weather event, civil protest or contagious disease occurs in a particular region, travel insurers will issue a travel alert.
For example, Zurich Insurance issued this travel alert on 23 January 2020 for coronavirus (see their Covermore policy).
The travel alert stated that cover was available if you are already in an affected region:
IMPORTANT PLEASE READ: IF YOU ARE OVERSEAS AND HAVE CONTRACTED THE CORONAVIRUS PLEASE BE ADVISED YOUR TRAVEL INSURANCE POLICY WILL COVER YOU FOR OVERSEAS MEDICAL EXPENSES INCURRED (UNLESS YOUR PARTICULAR POLICY GENERALLY EXCLUDES THIS). Please call our 24 hour emergency assistance team immediately on +61 2 8907 5619 in the unfortunate event you have contracted the coronavirus whilst on your journey overseas.
The travel alert warned that cover may not be available if you travel to the affected region:
Please be advised your travel insurance Product Disclosure Statement (PDS) includes certain terms, conditions, limits, and exclusions. In particular, there are certain policy exclusions that apply to specific benefit sections for claims arising due to an Epidemic, Pandemic or outbreak of an infectious disease or any derivative or mutation of such viruses, or the threat or perceived threat of any of these. Pending further developments, claims will be assessed based on what the cause of this event has been deemed to be.
Travel advice is issued by the Australian Department of Foreign Affairs and Trade (DFAT) on its smartraveller.gov.au website. It issued this travel advice on China on 24 January 2020:
We have raised the travel advice for all Australians to do not travel to all of Hubei Province. The Chinese authorities have put new measures in place to contain the spread of the coronavirus. Strict travel restrictions have been imposed in Wuhan and a number of other cities in Hubei Province. Authorities could impose further restrictions across Hubei Province with little notice. If you travel to Hubei Province at this time you may not be allowed to depart until travel restrictions are lifted. Existing measures including wearing masks in public places and avoiding travel in and out of cities in Hubei Province remain in place. Authorities may expand travel restrictions as the outbreak develops. Monitor local and international media for further updates, and contact your travel agent and airlines for information. In January, Chinese authorities identified an outbreak of a new type of coronavirus, in Wuhan City in Hubei Province. If you have travelled to Hubei Province and have developed symptoms of respiratory illness, contact your doctor. See our health section for more information.
Note: The DFAT travel advice is at the highest level, putting Hubei Province on par with Afghanistan, Iraq, Yemen and Syria.
DFAT states that its travel advice for the rest of China remains at the lowest level: exercise normal safety precautions, which does not activate the general exclusion outside Hubei Province. The DFAT could raise this advice level at any time.
DFAT published this map on 24 January 2020:
The “epidemic exclusion” is wide and applies to many diseases even though the insurer has not issued a travel alert. It is enough if the risk is known, such as if it is listed in the “Health” advisory section in the DFAT travel advice for the country.
The Australian Financial Complaints Authority (AFCA) recently considered a travel insurance claim for cancellation compensation by travellers who were advised by their doctor to cancel their planned travel to Vietnam and Cambodia on medical grounds, as those countries are listed with the active zika virus. The medical grounds were that the travellers were trying to fall pregnant.
In Case 6016 of 12 June 2019, the travellers’ claim was declined for these reasons:
The policy contained this exclusion: We will not pay for claims caused by… or arising from an Epidemic. “Epidemic” means a fast-spreading contagious or infectious disease or illness in an area as documented by a recognised public health authority.
There is no dispute the complainants cancelled their trip due to the presence of the zika virus in the countries they intended to visit. I accept at the time of purchasing the policy the complainants were unaware the zika virus was affecting these countries. I also accept they were unaware at that stage it would impact their family planning, as they had not yet spoken to Dr KP.
However, based on the information provided, I consider the cause of the cancellation was the perceived threat of an epidemic, being the zika virus. This means even if I were to accept the complainants had established a prima facie claim for the cancellation costs, I consider the above exclusion applies and the insurer was entitled to decline the claim.
The insurer, and its agent, are not obligated to provide personal advice to the complainants or ensure the policy was suitable for their needs. It is the responsibility of the complainants to ensure the policy suited their needs. There is no dispute the complainants received a copy of the PDS and certificate of insurance setting out the terms of the policy.
Comment: It is the traveller’s responsibility to find out, not the insurer’s responsibility to warn, of circumstances which exclude cancellation cover.
To answer the question: Does travel insurance cover coronavirus?
- Travel insurance will cover travellers for medical expenses and cancellation caused by an epidemic only if they are already in the region before the insurer issues a travel alert, or the DFAT raises the travel advice level to Reconsider your need to travel or Do not travel.
- Between 20 January and 24 January 2020, most travel insurers issued a travel alert which meant that travel insurance policies issued after that time do not have coronavirus cover because of the epidemic exclusion. On 23 January 2020, DFAT raised the travel alert level which triggered the travel advice exclusion.
- This is a compelling reason why travel insurance should be taken out at the time the travel is booked and why it is good practice to consult the www.smartraveller.gov.au website before booking travel and travelling.