News Center 7 investigates: Will travel insurance cover pandemics differently from now on?

Debbie Boyle said she and her husband planned a “bucket list trip” to New Zealand and Australia. The couple was supposed to go for a month in 2020.

Then, the pandemic hit.

Boyle said a lot of the hotels, airlines and other vendors refunded them — but not all. She said they were still out about $4,000.

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But they had travel insurance, so they were feeling good.

“Oh yeah, no concerns,” Boyle said. “Something happens, God forbid, we’re covered. We get all of our money back.”

But Boyle said the insurance company denied their claim twice.

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“Of course, there’s no verbiage in there for pandemic. Nor did we think to look for that, right? I think that caught the whole world off guard,” she said.

News Center 7 spoke with the dean of Cedarville University’s School of Business Administration, Jeff Haymond, for some added perspective on this story. Haymond is also an economics professor at CU and holds a PhD in economics from George Mason University.

“I think it’s really helpful to take a look back at what we have insurance for in the first place,” Haymond said. “We insure ourselves to prevent unacceptable loss. And ‘unacceptable loss’ differs for different people at different income levels and … what will affect them.”

As for Boyle, she said she kept fighting and finally got reimbursed, but that she’ll think about travel insurance differently from now on.

“Trip insurance sounds like a good thing,” she said. “Now, I’m going to think twice about the fine detail and really question them about pandemic-type situations. If we buy travel insurance again, I’m going to go through that thing with a fine-tooth comb.”

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Bottom line, Haymond says, when it comes to travel insurance: if you can’t afford to eat the cost of the trip, don’t plan it in the first place. Haymond says be able to budget for the trip and self-insure. He adds, don’t buy insurance for something you can afford to lose.

“There’s some people that … if they were to have to eat a $400 plane ticket, that might mean they can’t make a car payment,” Haymond said. “That might mean they can’t make a house payment. That’s starting to get into unacceptable loss. Then, it might make more sense (to buy travel insurance). But for most of us, we want to try and budget so we can handle those kinds of losses because they are relatively rare.”

News Center 7 wanted to know if travel insurance will cover pandemics differently moving forward. There are two kinds of travel insurance policies: “Standard” and “Cancel For Any Reason” policies, which, despite the name, don’t cover every reason.

Before COVID-19, typically, neither covered pandemics. Currently, most “Standard” policies still don’t, but many “Cancel For Any Reason” policies do. But there’s a lot of gray area.

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Frequently Asked Questions:

Q: So, what do “Cancel For Any Reason” plans typically cover?

A: “Trip cancellation, trip interruption, travel delay, emergency medical care, and even emergency evacuation,” Mark Friedlander, with the Insurance Information Institute, said.

Q: What if your trip gets extended because you have to quarantine and can’t return home yet?

A: “Potentially, once again, it depends on how the policy is written,” Friedlander said. “Some have worked that in.”

Q: What if the government issues Stay at Home orders or shuts down airlines?

A: “In most cases, that is not covered,” Friedlander said.

Q: What if you get cold feet?

A: “That’s one exclusion that remains today. You cannot cancel a policy for being fearful of travel,” Friedlander said.

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Jeremy Murchland is president of the insurance company, Seven Corners. It actually covered pandemics before COVID and still does.

“We have our trip protection plan, our travel protection plans,” he said. “We don’t exclude pandemics so, again, if a pandemic comes up and your trip’s interrupted or you get sick, it’s just covered like any other illness.”

Most standard policies still don’t cover COVID specifically, but now many “Cancel For Any Reason” policies do.

ADVICE:

If you want pandemic coverage, look at “Cancel For Any Reason” policies. But, even then, they have exceptions, so read the fine print. And make sure they clearly cover pandemics and epidemics.

“Cancel for Any Reason” policies are typically 40-60 percent more expensive than a “Standard” policy. Plus, you usually won’t get back 100 percent of what you spend. It’s usually closer to 75 percent, but there are exceptions, so shop around.

Two questions to ask:

  • What are the requirements to cancel?
  • How many days ahead do I have to cancel?