Insurance Updates

As Australia’s vaccination rollout progresses and the availability of on-the-spot COVID testing grows, travel within certain parts of Australia is starting to become possible again. That said, developments over recent weeks highlight just how quickly the situation can change, meaning plans are put on hold or cancelled altogether. This article discusses how insurers are currently viewing COVID-related travel insurance claims and provides practical tips to help you reduce the chances of losing money in the event COVID throws your travel plans off course.

 

TRAVEL INSURANCE STATUS UPDATE

In general, most travel insurers are taking the stance that insurance is only available to cover sudden and unexpected events. Given the various travel restrictions and the high-level warnings which have been in place since mid-March of 2020, this generally means travel insurance for COVID-related impacts is not available.

Having said this, some travel insurance policies may provide cover for interruptions due to COVID. Some policies now cover medical expenses as well as cancellation costs caused by the virus. The catch? The Australian Government must allow travel to that destination* (for example, to New Zealand). However, there is still no insurer who is providing cover for sudden state border closures or travel bans. This is simply an impossible risk to price. 

 

WHAT YOU CAN DO: RISK MANAGEMENT

For now (restrictions permitting), the best option is to go local, and book accommodation which allows free cancellations up to the day before your booking.  When taking out travel insurance, read the Product Disclosure Statement carefully. Look out for specific COVID exclusions, and what the insurer considers acceptable means of reimbursement (such as travel credits). Even if travel credits are not your preferred format, some insurers may see that as adequate coverage for your loss. Other important considerations include whether travel requires you to be vaccinated, to receive a recent negative COVID test result, or to wear a face mask indoors and on public transport.

 

WHAT YOU CAN DO: IN THE EVENT OF A CLAIM

If a claim is necessary, request a refund from the provider first and foremost, and even ask your bank for assistance in retrieving the refund through the provider’s merchant. If this is unsuccessful, travel insurers will require evidence the trip was cancelled due to enforceable COVID restrictions and copies of all correspondence between you and the provider, so it is always best to correspond in writing.

 

A NOTE ON LOCAL TRAVEL BOOKINGS MADE PRIOR TO COVID-19

In a recent decision about pre-COVID travel plans which were not possible due to a lockdown, The Australian Financial Complaints Authority (AFCA) found it was unreasonable for the insurer to decide local travel booked before, or early during the pandemic was a foreseeable risk because lockdowns have only recently become a normalised response to outbreaks. AFCA advised that a year ago, it was unreasonable to assume anybody could have foreseen a return to lockdown, meaning travel booked prior to COVID-19 (or early in the pandemic) should not have the ‘foreseeability’ exclusion applied.

Most travel policies now have specific exclusions relating to COVID-19 cancellations, and if this is the case, the ‘foreseeability’ clause is irrelevant.  Therefore, prior to making any firm travel plans, be sure to check the travel policy for any general exclusions relating to COVID-19.

 

NEXT STEPS

If you believe you may have a travel insurance claim, please reach out to your Honan broker to discuss.

 

Claudia Pengly

Claims Executive

claudia.pengly@honan.com.au

 

*At the time of publication, aside from New Zealand, international travel is banned by the Australian Government, so no insurer will cover cancellation costs and accident/medical costs for overseas travel.

 

 

Discover the latest updates for COVID-related Business Interruption Claims.

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