COVID-19 has thrown many travel plans into disarray in 2020. If you were one of the many Australians with a trip booked, hopefully you had travel insurance, and you're able to claim on some or all of your losses. But that will depend not only on what your policy covers, but also when you bought the policy.
- People who bought travel insurance before COVID-19 became a 'known event' may be covered for medical expenses that arise from contracting the disease overseas, and may even be covered for cancellation expenses.
- People who bought travel insurance after the disease was a known event may not be covered for medical or cancellation expenses relating to contracting the disease, or from changes to travel plans that result from quarantine measures, for example.
In this article, we look at what is meant by the term 'known event', reveal which insurers cover you for pandemics, and explain what you're covered for.
As of 18 March 2020, the Department of Foreign Affairs and Trade updated alert levels to "Do not travel" for all destinations. On 25 March, this was escalated to a travel ban.
If your travel insurance policy excludes cover for pandemics or epidemics, or you bought the policy after COVID-19 became a known event, then your travel insurance won't cover losses you've incurred as a result of coronavirus or the coronavirus travel bans.
Speak to your insurer before cancelling your trip, because if they won't cover cancellation, rearranging your holiday dates to a later time may be a more cost-effective option.
If your travel insurance policy includes cover for pandemics or epidemics, and you bought the policy before COVID-19 became a known event, then you should be covered.
Here's a list of insurers that covered pandemics under their comprehensive policies prior to 31 January 2020. Some insurers have since changed their terms to exclude pandemics. Basic policies may exclude medical or cancellation costs.
Insurance is intended to protect you against the unknown, so once an event becomes known, it's usually too late to buy insurance to cover you for that specific event.
When an event becomes 'known' is a grey area, but generally it's when it's publicised in the media or on official government websites. Insurers' definitions can vary, so check with your insurer on when they cut off cover for a specific event.
When insurers cut off cover for the COVID-19 pandemic
If you bought your travel insurance policy before the pandemic became a known event, there's a chance you'll be covered – depending on your policy. See above for our list of insurers that cover you for an epidemic or pandemic.
Insurers that do cover epidemics or pandemics cut off cover for claims resulting from COVID-19 from around 21 January 2020 for travel to China, and 31 January for travel worldwide.
However, in a recent dispute ruling, the Australian Financial Complaints Authority (AFCA), which is the external ombudsman for the insurance industry, stated that the insurer couldn't rely on articles published on a website.
AFCA also said that the 'known event' exclusion in the insurers policy related to whether the policyholder was aware of COVID-19 and if any potential claims could arise from it.
So even though the insurer, Mitsui Sumitomo (provider of InsureandGo and Tick Travel Insurance), sought to deny that person's claim because they deemed it a known event, AFCA directed them to pay the claim.
Below are the COVID-19 cut-off dates that some insurers listed on their websites. But if your insurer has denied your claim because they deemed COVID-19 a known event, it's worth lodging a dispute with your travel insurer.
If you don't get a satisfactory outcome, escalate your dispute to AFCA.
|Brand||Cut off cover to China||Cut off cover worldwide|
|InsureandGo||21 January||31 January|
|Good2Go||24 January||24 January|
|Travel Insurance Direct||23 January||31 January|
Many, but not all, travel insurers cover pandemics or epidemics, as long as you bought the policy before it became a known event. Cover will vary between policies.
Travel insurers tend to exclude or cover both pandemics and epidemics. So if you're reading the terms and conditions, you can scan for either of these words to check if you're covered.
An epidemic is an outbreak of disease that happens in a wide geographic location and affects a lot of people. A pandemic is an epidemic that has spread throughout a whole country or across continents.
If you bought your policy before COVID-19 was a known event, and your policy covers medical expenses as a result of a pandemic, you'll be covered for medical expenses if, for example, you contracted the coronavirus on your travels.
Many travel insurers cover medical expenses in a pandemic, but most people will need cover for cancellation expenses – for example, after the government changed the travel advice for your destination to 'Do not travel'.
If your policy covers cancellation expenses, you'll be covered to cancel or possibly amend your travel arrangements to avoid the affected area.
Check with your travel insurer specifically to find out what they'll cover, because it can be tricky.
Some insurers are very good at producing policy fine print to deny your claim. But in the context of COVID-19 travel insurance, industry ombudsman AFCA has stated it will also take into account the relevant legislation which states that an insurer can't deny your claim if you decided not to travel because of concerns for your safety.
Several travel insurers are allowing people to reschedule their travel insurance or cancel and claim a credit toward a future premium. So ask your travel insurer what they can do for you.
Travel insurance policies have a 14-day cooling off period. If you change your mind in this period, you can cancel your policy and get your money back from the insurer.
Otherwise, some insurers may decline to refund, reschedule or provide a credit for unused travel insurance premiums.
However, AFCA considers a credit or refund of your premium a fair outcome where:
- you got a refund or credit from all of your travel providers, so there's nothing left to claim on your travel insurance
- your travel insurance policy has a COVID-19 related exclusion that prevents you from claiming on the policy.
So if your travel insurer has knocked back your request for a credit or refund, lodge an internal dispute with the insurer, noting AFCA's stated approach. If they still refuse, escalate a complaint to AFCA.
If you didn't purchase a policy by 31 January 2020, it's unlikely you'll get travel insurance that covers claims resulting from the coronavirus since it was deemed a known event.
Some travel insurance policies are now available internationally that may cover COVID-19-related claims, such as cover provided by Skyscanner or if you fly with Emirates. But these policies aren't widely available in Australia yet.
Most travel insurers also suspended policy sales in response to the Australian Government's international travel ban.
International travel insurance for COVID-19
Some travel insurers are starting to sell international travel insurance to Australians, such as Cover-More and Fast Cover. However, it won't cover COVID-19-related claims, and you're required to have the government exemption to travel overseas.
CHOICE tip: If you're unable to get cover for coronavirus now but you still plan to travel, you should get travel insurance to protect you from events not related to COVID-19.
Domestic travel insurance for COVID-19
With international borders shut but internal borders starting to open up, Australians will likely look to travel at home this summer.
There are several insurers selling domestic travel insurance, but it's unlikely to cover you for COVID-19 or travel bans related to COVID-19. There are other events that could interrupt your holiday, though. Remember the bushfires that extinguished our summer holidays last year? Well, this year, the Australian Bureau of Meteorology is predicting floods.
So travel insurance for an Aussie summer holiday maybe worth considering if you're:
- spending a lot of money on your trip
- carrying expensive equipment, such as custom-made surfboards
- hiring a car, as some travel insurance can cover the damage excess.
Read your travel insurance Product Disclosure Statement. In the first instance, it's up to you as the policyholder to establish that you have a valid claim under the policy terms and conditions. That generally means handing in lots of documentation.
Then it's up to the insurer to decide if your claim is valid and there's no policy exclusions that should be applied.
If you disagree with the insurer's decision regarding your claim, raise a complaint via their internal dispute resolution service.
If you don't get a satisfactory result from the insurer's internal dispute resolution, escalate your complaint to AFCA.
Travel insurance should protect your safety
In an AFCA dispute, some travellers cancelled a trip to Great Britain and Ireland on 5 March amid increasing concerns about COVID-19.
Their Auto & General (provider of Budget Direct and other travel insurance products) policy covered epidemics, but the insurer denied their claim on the basis that there was no travel ban in place at that time – the Australian Government travel ban didn't come into effect until 25 March.
AFCA ruled that the travellers' decision to cancel the trip was necessary for their safety
The travellers were aged in their 60s, making them potentially more vulnerable to serious ill health if they caught the virus that causes COVID-19. AFCA ruled that the policy covered epidemics and that the travellers' decision to cancel the trip was necessary for their safety. This means the Insurance Contracts Act 1984 doesn't allow the insurer to decline the claim.
If your travel insurance policy covers pandemics or epidemics but you've had a claim denied for similar reasons, raise a complaint with your insurer, citing section 54(5)(a) of the Insurance Contracts Act 1984.
To add a rather disheartening footnote, Auto & General travel insurance policies no longer cover pandemics or epidemics.
If an insurer defines natural disaster as a list of events like earthquakes, tsunamis, volcanic eruptions,floods, wildfires, heat then cover for pandemic will probably be excluded from the definition of natural disaster.
However in an AFCA ruling, insurer Tokio Marine (provider of RACV and World2Cover travel insurance), did not define natural disaster in its policy and didn't specifically exclude Pandemic or Epidemic, so AFCA ruled that Covid-19 should be covered by the policy as a natural event.
Getting your money back on flights in a pandemic
If the airline has cancelled or delayed flights due to a pandemic, it's considered an event that is out of their control and the airline will have a policy providing compensation for cancellation or delay.
Familiarise yourself with the policy in case you need to remind the airline of their terms and conditions, because they won't necessarily volunteer the information to you.
For the policies of Australian domestic airlines, read our advice on coronavirus flight refunds.
Getting your money back on accommodation in a pandemic
Your rights for accommodation bookings are covered by Australian Consumer Law and you have access to consumer guarantees, the same as for any other goods or service.
Booking sites generally have their own terms and conditions. If you used a booking site, you should deal with them, not the end-point service provider. The booking site should still be subject to Australian Consumer Law.
If you booked accommodation through a third-party provider like Airbnb or Booking.com, persist with your cancellation via that third party, since it's unlikely you'll be able to enforce the Australian Consumer Law on the overseas accommodation provider.
If you paid by a credit card or a Visa or Mastercard debit card, you also have a right to credit card chargeback if the accommodation provider hasn't provided the service.
The sites usually have standard cancellation policies, but in the event of emergencies like pandemics, they may make an exception.
Airbnb, for example, may waive cancellation penalties for bookings made on or before 14 March. So familiarise yourself with the booking site's policy and quote it to them if necessary.