Travel insurance: What you should look for and look out for in a pandemic

Winter is arriving. It’s getting dark earlier but it doesn’t really matter because there’s no place to go anyway. Any crowded room could be a petri dish, and you don’t want to become a statistic. You Americans, your traditional Thanksgiving feast will be Cornish game hens with your spouse. Talk to the rest of the sequestered family on Zoom, with which you’ve become sadly too familiar.

You not only dream of this Covid-19 nightmare to end, you dream of exotic beaches, dimly lit piazzas, hotel rooms with a view. It seems like the last time you were on a plane came before TSA. Your travel itch has become a total body rash. You scratch it all day. How do you cure this during a pandemic?

One possibility is travel insurance.

With news of vaccines beginning to surface, travel may return to normal sometime in 2021. Yet this virus doesn’t do quarantine. It will linger for a long time. Getting out of the house and out of the country will be risky. Coming home may be, too. Travel insurance can ease your anxiety a bit.

However, be careful. The travel insurance business during this pandemic is confusing and boring but very important to know if that’s the avenue you pursue. It’s not an endgame. It can help only if certain circumstances are met.

In fact, my own insurance agent has simple advice.

“To be honest, if it’s private travel, the first thing is to stay home,” said Christophe Vandeputte, of Belgium-based Expat & Co. “The international scene is not good enough to travel. It’s better to be safe than sorry.”

That’s what I’m doing. I have been outside Italy for all of 12 days in 2020. In my Lazio region of Italy, I’m allowed to travel to all European Union countries and many others with limited restrictions but this second wave that hit Europe makes it too risky. I’ll wait for the curves to fall.

Still, I know people have less patience than I have. I live in Rome. I’ve been happily homebound this year. It beats being stuck in Des Moines.  If you must travel, for you’re in danger of peeling the wallpaper off your bedroom walls, get extra assurances.

“The reasons for having travel insurance are very real, and I think especially now when you get sick while you travel it’s important to have a policy,” said Mollie Fitzgerald of Frontiers Travel and an advisor for numerous travel organizations such as Abercrombie & Kent and Conde Nast Traveler magazine. “Many countries require it.”

Even before this pandemic, travel insurance had become in. According to the U.S. Travel Insurance Association, Americans paid $3.8 billion on travel insurance in 2018, up 41 percent from 2016. Since the pandemic, a third of travel insurance buyers searched for plans covering medical expenses and cancellation if they get the virus, according to Squaremouth, a travel insurance provider.

“It is absolutely worth it,” said Brendan Bridgeland, director of Cambridge, Mass.-based Center for Insurance Research. “I’ve used it personally myself and made claims. But the problem is you have to have a better understanding of what it is you’re actually buying. That’s where the disconnect is for consumers. It’s providing very, very limited protection. That protection can be useful. People don’t have clarity about what it is they’re actually purchasing. They see it as something broader. It pops up on Expedia or Orbitz. ‘Oh, if anything goes wrong I’m protected.’ No. That’s not the way it works. The way it works is narrow circumstances.”

Worried about possible scams, U.S. Rep. Raja Krishnamoorthi, D-Ill., chairman of the House Oversight and Reform Subcommittee on Economic and Consumer Policy, even opened a congressional investigation into profiteering travel insurance companies.

Sources I talked to in the insurance and travel businesses didn’t note any wide-spread scams. There really is no need. The policies are confusing enough. That’s why I’m here to provide some do’s and don’ts if you want to purchase travel insurance during a pandemic that has killed more than 1.4 million people.

Read the fine print

This will be hard for people who view fine print on documents as Chinese. It’s important. Know exactly what is covered and what isn’t. Travel insurance companies will not cover pre-existing conditions. In other words, if you bought travel insurance before Covid became a “known event” and you weren’t able to travel due to the virus, your travel insurance would cover you. The World Health Organization declared it a pandemic, a “known event,” on March 11 although Allianz Global Assistance, the world’s largest travel insurance company, uses Jan. 22.

However, if you bought travel insurance after those dates and contracted Covid and can’t travel, you must check with your insurance company if they cover pandemics. Many do not.

Some insurance companies, such as LV in the United Kingdom, stopped selling travel insurance during the pandemic. But many insurance companies rewrote policies to include Covid. My Expat & Co. treats Covid like any other illness. If I get Covid while I travel, it will cover me. Find out from your insurance company if they do the same.

“Covid insurance as such doesn’t exist, in general,” Vandeputte told me. “We have travel plans also covering the risk of it.”

Still, it will also depend on how you got the virus. Insurance companies would investigate and make sure you followed local protocols. 

“If we see a person went to a big party, for example, we have the right to refuse to reimburse because he didn’t act as a responsible citizen,” Vandeputte said. “That is always required. Otherwise if you’re hospitalized or have treatment costs due to Covid we will cover it.”

Many travelers want to insure against cancelled trips. This year I had four trips cancelled when airlines scratched my flights due to the pandemic. I have never taken travel insurance. Why? In 42 years of international travel, this is the first time I’ve ever had trips cancelled. I received a cash refund on one and am still waiting on another on a flight cancelled in July.  I received vouchers for the other two. I plan on rescheduling those same two trips. I did not want the hassle of fighting over cash refunds, although airlines are required to provide them.

If you do take the travel insurance, carry on your trip the company’s 24-hour hotline number and every receipt and document you have.

“Travel insurance makes you whole; it doesn’t give you extra money,” wrote Matt Kepnes on his Nomadic Matt travel blog which specializes in money-saving travel tips.

Determine how much it’s worth to you

Just for fun, I pretended (no, fantasized) that I was booking a vacation from Dec. 21-26 in the Bahamas, one of the countries that permits travel from the U.S., although it requires a negative Covid test and a travel health visa. I checked numerous insurance companies, put in the dates and punched in the U.S. as the departure country. Insurance isn’t expensive.

Travel insurance from Tin Leg was $152 and covered up to $100,000, Trawick International was $199.28 and covered $250,000, Berkshire Hathaway cost $192 and covered $100,000, including medical evacuation.

Shop around and talk to an agent before buying.

Make sure you don’t change your mind

Travel insurance will cover you in case your flight is cancelled. However, they will not cover you if the Covid curve starts to rise and you decide to stay home or come home early.

“So let’s say six weeks out you decide to book a trip to Turks and Caicos which currently is open for Americans,” Fitzgerald said. “You have to have proof of a Covid test. That country requires travel insurance and medical evacuation. Most travel insurance policies will respond if you get Covid before you go and can’t travel or you get diagnosed on the trip and need treatment or quarantine. 

“What it doesn’t respond to and what everyone in the travel industry says is you can’t just decide, OK, you booked a trip six weeks before leaving and two weeks before you go, you make the decision that, ‘Gee, there have been lots of Covid cases in the Turks and I think I’m going to stay home.’”

You also won’t get reimbursed if you’re in the middle of a two-week trip and after a week get spooked by a spike in the local Covid curve. You can’t pay to change your return flight or buy a new one-way ticket home and get reimbursed.

Cancel For Any Reason

Known in the travel industry as CFAR, this is insurance in which you will get reimbursed for any reason, even if you get cold feet. However, it’s not advisable. It’s expensive, discriminatory and doesn’t cover everything. In fact, many insurance companies suspended CFAR during the pandemic.

It can be 35-50 percent more expensive than regular travel insurance. It also maxes out to only 75 percent of your total lost expenses.

“If you’re 78 years old, it’s a lot more expensive than if you’re 38,” Fitzgerald said. “A busy trial attorney may have no idea what his schedule is like in 10 months. In that case, maybe it’s worth it.”

Don’t travel to the U.S.

For my other English-speaking readers, the pandemic has barely slowed down in the U.S. since it arrived. The U.S. has 4 percent of the world’s population and about 20 percent of all cases (13 million) and deaths (266,000). In the last week it has averaged 175,000 cases a day and nearly 1,700 deaths. 

More to the point, the U.S. has the highest medical costs in the world. Prudhomme recalls reading one local story of a Belgian on business in the U.S. and he became hospitalized with a serious case of Covid. His ending medical cost was about $1 million. Luckily, his company’s insurance covered it but a confusing insurance policy could financially ruin a visitor for life.

In fact, many countries’ embassies in Washington are advising their citizens coming to the U.S. to make sure their insurance policies cover pandemics.

“New trips to the USA we have some requests,” Vandeputte said. “But I have to be honest. I don’t have a big wave of requests for the U.S. because of stories in the news and the costs in the USA means also a higher risk for big costs. People are a bit afraid. Many people now, with the Covid, are more informed of the prices in USA and how it works and that it’s pretty commercial. In that case, maybe it’s better to wait to go to USA.”

Get refundable hotels and flights

On all four of my cancelled trips, I booked hotels with free cancellation. I didn’t lose a centesimo.

Flights are more difficult but in the times of a pandemic, a refundable flight is a major plus. My one trip outside Italy went to Saudi Arabia in late February. My return flight was nine days before the country stopped all incoming and outgoing flights to Italy. If my EgyptAir flight to Rome got cancelled due to a government or airline policy, the airline is obligated to reroute me back. 

When? Who knows? I could still be there. Many travelers just buy a new ticket home by a different route and hope the original airline reimburses you. This could take months. Travel insurance would reimburse you. Some airlines now even offer free schedule changes.

Getting refundable flights, however, can be expensive. Balance the extra cost of a refundable flight with the cost of travel insurance. Then talk to the potential insurer. Find out if their policy covers cancellations due to a pandemic. 

Recommended travel insurance companies

For what it’s worth, in October Forbes Advisor recommended these three:

• AXA Assistance. 5.0 rating. Platinum plan has Covid coverage of $250,000, 100 percent Covid cancellation coverage and 75 percent of Cancel For Any Reason. 
• HTH Worldwide. 5.0 rating. Trip Protection Preferred plan provides $500,000 for Covid medical coverage and 100 percent for Covid cancellation. It also pays 75 percent for Cancel For Any Reason.
• Trawick International. 5.0 rating. Safe Travels Voyager plan offers $250,000 for Covid medical coverage, 100 percent cancellation due to Covid and 75 percent of CFAR.

Whatever you do, make sure you know your options. Know of all scenarios and how they will be covered. 

“Travel insurance deals pop up on a website that look great because they’re cheap. The reason they’re cheap is because they’re not covering as much,” Bridgeland said. “They’re covering narrow things. Look at the price and how it’s being sold to you. If it looks very reasonable and it’s just a button with a very brief description of what you’re getting, I would steer clear. Look at details and come in with the expectation of what protection  you would like.”