On March 13, 2020, the Government of Canada imposed a global travel advisory on all non-essential travel abroad to limit the spread of the COVID-19 pandemic.
While international and inter-provincial borders closed almost immediately, lockdown restrictions are now beginning to ease and some of these borders are opening. Canadians can now travel to Quebec, Ontario, Saskatchewan, Alberta and BC without having to self-isolate for 14 days upon arrival. Countries such as Dominican Republic, France, and Mexico have also opened their borders (with various pre-conditions). What are the key travel insurance considerations you should keep in mind while planning your next trip?
What is travel insurance? Ticket and Medical Travel Insurance
Most people travel to relax. Travel insurance is a way to guarantee the costs associated with travelling. The two main stressors of travelling are trip cancellations and medical emergencies – these are also the two types of travel insurance.
Ticket insurance guarantees compensation for when your trip has been interrupted, delayed, or cancelled. The less expensive ticket insurance is often called “named perils” because it only covers cancellation causes named in the policy. Travelers with cancel for any reason (CFAR) travel insurance can cancel the trip within a few days of the departure date without a reason and expect to receive a partial refund from the insurer.
Medical insurance ensures compensation for emergency medical expenses (e.g. doctor’s visit, hospitalization, prescription, and evacuation).
Impact of COVID-19
The Government of Canada’s global travel advisory – published on March 13, 2020 – remains in effect. Given this foreseen risk, many ticket and medical insurance policies are unlikely to cover COVID-19-related cancellations or illnesses. In fact, some Canadian insurers have stated that trip cancellation claims related to COVID-19 for policies purchased on or after March 13, 2020 will not be payable.
Travel insurance is still worth considering for a future trip
Whether travelling internationally or domestically, travel insurance is still important. Here are some tips for how to choose an insurance policy during a pandemic.
First, contact your airline or travel provider directly to learn how much expenses you are entitled to through their refund process. Many companies have altered their cancellation policies since the beginning of the pandemic. Contact your airline or travel provider to understand the updated cancellation and re-booking policies applicable to your trip expenses. Your travel insurance will cover the non-refundable, non-transferable portion of any prepaid travel expenses up to the insurance policy maximum.
Next, choose a travel insurance policy.
Ticket insurance: Whether choosing a named peril policy or a CFAR policy, travelers should pay close attention to the wording. Who would be forced to pay expenses that are caused by an unexpected event (aka a “force majeure” or an Act of God)? In the case that a trip has been cancelled, will the insurer provide travel vouchers or direct refunds?
Medical insurance: Canadian health insurance may not cover all medical fees, and travel insurance can make up the differences between provincial healthcare plans across the country. In some insurance policies, medical insurance will still cover medical expenses that are not related to COVID-19. Medical evacuation coverage is especially important during COVID-19. Nations, provinces, and territories have the power to impose or remove travel restrictions as they see fit to protect their residents during the pandemic. This may affect travelers’ ability to travel freely and to return home.
Future of travel insurance
The COVID-19 pandemic has changed the travel insurance industry. Some companies have stopped selling policies in this time – particularly “cancel for any reason” insurance – and existing policies have more limitations. Make sure to research different policies, read their wording, meet the terms of your policy (e.g. submitting original receipts and keeping a copy on record), and understand your coverage. Continue to read your policy as your travel date draws close. If you need help understanding your insurance policy, our team at Nelligan Law can help.
Nelligan Law gratefully acknowledges the contribution of Kathy Jiang, Student-at-law, in writing this blog post.