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(CNN) — Those who had travel insurance in 2020 found their policies offered little protection against the global pandemic that has dramatically disrupted travel around the world.
So what peace of mind will travel insurance provide in 2021?
Given the details and complexities involved in insurance, the answer is not straightforward, but the bottom line is that US consumers can expect more from travel insurance than ever before.
Americans spent nearly $3.8 billion on travel protection in 2018, including travel cancellation and interruption, emergency medical and medical evacuation policies, according to a 2019 American Travel Insurance Association study. The figure is up 40.9% from 2016, the study said.
According to Megan Moncrief, chief marketing officer of SquareMout, a travel insurance comparison site, the coronavirus pandemic was an unprecedented event. Trip interrupted.
This is largely because many policies did not include pandemic coverage.
“Although a handful of insurance policies covered trips affected by government-issued travel alerts and CDC alerts, most travelers who purchased insurance were not covered,” Moncrief said. increase. “They saw losses left and right.”
Travel insurance companies have changed their policies to offer more coverage for Covid-19.
Alberto Pizzoli/AFP via Getty Images
Adapting policies to include Covid-19
Moncrief said the shift in the industry began when Covid-19 spread in the United States in March. “Companies have reassessed their policies and started responding to what was happening in the world,” she says.
Today, many of the largest providers such as AXA Assistance USA, Berkshire Hathaway Protection Plan, Seven Corners and Generali have changed their policies to consider unplanned Covid-19 infections like any other disease or virus. Did.
In fact, of the 20 providers listed on SquareMouth’s website, 19 offer medical benefits to travelers diagnosed with the virus while traveling, but only if they purchased the policy prior to diagnosis. It offers. In addition, 13 included compensation for cancellation due to virus infection before travel.
But Stan Sandberg, co-founder of travel insurance comparison site TravelInsurance.com, said the standard trip cancellation and medical insurance on the market today is only economical if you contract Covid-19. Please note that you are protected from loss.
There are caveats, according to Sandberg. Some travel cancellation policies cover quarantine if you catch the virus while traveling. It means that
“Under the cancellation policy, you get travel disruption coverage that pays for the extra costs of quarantine, such as extra hotel nights and the extra cost of rebooking flights,” says Sandberg.
Even if you’re traveling with a friend or family member who contracted Covid-19 and was forced to quarantine as a result, Sandberg says the coverage will still apply.
As always, medical evacuation is included in most travel insurance plans, but that doesn’t mean you can go home, according to Suzanne Morrow, director of products and services at travel insurance comparison site InsureMyTrip. . “In many cases, you end up evacuating to the nearest medical facility that is not the hospital you originally chose,” she says. “Everything depends on the plan.”
CFAR: “Cancellation for Any Reason” Insurance
Sandberg notes that the current policy, which considers Covid-19 as a disease that can lead to travel cancellations, does not cover all Covid-related travel issues.
These could include new quarantine requirements for arriving travelers. This creates a change of heart about travel and general concerns about travel due to rising cases.
The best way to protect yourself in this situation is to purchase a no-reason cancellation policy, known in the industry as CFAR. This policy will increase your premium by about 40%. For example, a standard $1,000 cancellation policy increases to $1,400.
Also, CFAR typically only reimburses travelers for 75% of the cost of the trip, whereas the cancellation policy reimburses 100%.
Despite the higher cost, Moncrief and Sandberg recommend CFAR to travelers with Covid-related concerns.
“It’s your only safety net,” says Moncrief. “It’s also the simplest policy because it leaves you with less to prove when you’re trying to get your money back.”
Since the outbreak of the pandemic, CFAR policies have become much more common than they used to be.
SquareMouth saw a 500% increase in travelers buying CFAR insurance from 2019 to 2020, while TravelInsurance.com saw less than 10% prior to Covid-19, while TravelInsurance.com now has insurance on site. accounts for more than 30% of sales.
According to InsureMyTrip’s Morrow, overall travel insurance sales are down 80% from a year ago, but CFAR continues to sell. “People who buy insurance choose CFAR,” she says.
money factor
According to our experts, the new standard travel insurance may be more comprehensive, but it’s not necessarily more expensive.
In general, a typical trip cancellation policy costs 7% to 10% of the total trip cost.
So far, the policy rate has not been raised, Moncrief said.
Also, new Covid-19 variants are not exempt from policy.
Costa Rica is a growing number of countries requiring travelers to have medical insurance.
Marnie Hunter/CNN
Destinations that require medical insurance
Before the pandemic, travelers arriving at destinations rarely needed medical or travel insurance. That’s changing rapidly, with a growing list of countries including Costa Rica, Bahamas, Jamaica, and Aruba now mandating coverage as a prerequisite for enrolment.
“If you get sick in that country, the health care system is taxed and you may not have the money to pay for medical bills and other expenses,” says Sandberg. “By having medical insurance, you can protect the country if this happens.”
Requirements vary by destination. For example, international travelers going to Costa Rica are required to have travel insurance covering accommodations of at least $2,000 for quarantine and at least $50,000 for medical expenses related to Covid-19.
In the Bahamas, insurance is included as part of your travel health visa. It costs between $40 and $60 and includes proof of a negative Covid-19 test result.
Also note that U.S. Medicare and workplace-provided insurance policies often do not provide full coverage abroad. So while some countries require travelers to have some form of coverage, now more than ever, it’s worth considering getting extra medical coverage wherever you go.
As with Covid-19, insurers are adapting their policies to meet stated destination requirements.
For example, AIG Travel Guard currently has a policy that meets Costa Rica standards.
Overall, the travel insurance landscape is still changing amid Covid-19 and, according to our experts, may continue to change in the coming years.
“No pandemic like this has ever happened before,” says Moncrief. “It will take time for the industry to fully adapt.”
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