COVID-19 travel bubbles: What you need to know about travel insurance

It’s been a long year for those who love to travel. With talk of ‘travel bubbles’ you may be keen to start planning your next adventure. But before you book those flights and pack your bags it’s important to think about insurance.

As we know too well, snap lockdowns and quarantines can impact the best laid plans. So, what happens if your plans are suddenly cancelled? What about if you are overseas and forced to quarantine for longer than you had planned to be away? Will the extended hotel stay be covered and costs of cancelled/rescheduled flights? What about if you actually contract COVID-19 while on holidays – will your medical bills be covered?

These are all important things to consider before you travel. You should not assume that a standard travel insurance policy will cover you for the above scenarios.

In the past, blanket exclusions for claims relating to pandemics featured in most travel insurance policies. COVID-19 was declared a pandemic by the World Health Organization on 11 March 2020.

But to attract your business, travel insurers have developed new products to offer cover for COVID-19 related medical claims and cancellations within limited ‘travel bubbles’, albeit with some important fine print.

Important limits to cover are:

• No cover where travel is to a country on the Australian government’s ‘do no travel’ list (so all destinations but New Zealand are likely to be out for some time);
• No cover for claims due to the threat (or perceived threat) of COVID-19 rather than an actual diagnosis or outbreak;
• No cover for claims relating to government-imposed border lockdowns; and, finally
• No insurer is yet prepared to cover the COVID-19 risks associated with multi-night cruise ship holidays. 

Who is covering COVID-19 related claims?

One provider, Covermore says they will cover you for COVID-19 related claims. But to be clear on what exactly they are they agreeing to cover the best advice is to read the fine print.

As above, Covermore are not providing cover for COVID-19 expenses if you travel to any country on the Australian Government’s ‘do not travel’ list nor will they cover claims relating to government directed border closures; or mandatory quarantine.

Covermore’s Product Disclosure Statement (‘PDS’) (Premium) makes clear that it only covers travel delays that occur within Australia and New Zealand. The delay must be ‘temporary’ and ‘unforeseeable and outside your control.’

Covermore will cover you for medical related expenses if you are diagnosed with COVID-19 whilst travelling and they will also cover costs of cancellation if you are forced into quarantine because of a positive test, or close contact with someone who tests positive, before departure.

It’s worth noting, however, that New Zealand provides reciprocal health cover for Australians requiring immediately necessary medical treatment (excluding ambulance cover) so you should be covered for any emergency public health COVID-19 related costs in that country.

Travel Insurance Direct have introduced cover for “some Coronavirus related events” but, at the time of writing, are only offering cover for domestic travel and no cover for international trips or cruises.  

A review of their PDS confirms they still apply a broad general exclusion relating to pandemics but, it goes on to say this does not apply to “coronavirus travel costs’. The cover available mainly relates to cancellation/change of plans where you or a family member are actually diagnosed with coronavirus and includes cover in the following circumstance:

During your trip, you or a member of your travelling party are confined to compulsory quarantine as a result of your or their diagnosis of, or confirmed close contact with a case of, coronavirus, we will pay for your reasonable additional travel, meals and accommodation, including in-room entertainment.

Pump up the in-house movies! But, importantly, note that you will not be covered under this policy in circumstances such as where you or a family member aren’t actually directly exposed to COVID-19 but say where you have to cancel or extend travel plans due to quarantine being imposed by a government or other official body.

Who isn’t providing COVID-19 related cover?

Most insurers are playing it safe and are not offering any COVID-19 related cover.

Southern Cross Travel Insurance make clear on their website that "there is no cover for COVID-19 under any of our policies, including if quarantine-free travel is paused or suspended". 

1Cover’s website states "Unfortunately, we still do not provide cover for anything related to the COVID-19 pandemic. Given the ongoing uncertainty, it's simply too difficult to set a premium that would cover these risks".

Similarly, Insure and Go’s PDS makes clear that they will not cover “Any claim arising from Novel Coronavirus (COVID-19) or mutations of Novel Coronavirus (COVID-19)”.

How to check what you are covered for

Most travel insurance policies are sold online so it can be hard to seek clarification. Don’t buy any product without reading the PDS first (this should be available on the website).

When reading the PDS scan for the words pandemic or COVID-19 and read through the exclusions clause. Make sure you are satisfied that the cover will meet your needs.

At this time, the options for COVID-19 travel insurance remain fairly limited. Hopefully this will change as vaccinations are rolled out around the world and we can return to that seemingly long-ago time where global travel was only limited by your bank balance and leave status.

If you want advice about a rejected insurance claim call Maurice Blackburn on 1800 196 050.