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Does your credit card travel insurance cover coronavirus cancellations?

Back in January, after months of planning (and saving), my wife and I booked tickets to Malaysia to visit the in-laws. The trip – which includes a 24-hour flight with one layover in South Korea – was meant to be the start of a long-overdue family reunion. But in the wake of COVID-19, like many Canadians, we’re scrambling to figure out what we should do, whether we should cancel, and what our insurance will cover.

In my case, I used a travel credit card with comprehensive travel insurance. Here’s what I’ve learned about credit card travel insurance and the coronavirus after reading up on terms and conditions and contacting my own card’s insurance company.

  • Travel Insurance is a key benefit offered by many credit cards, BUT it generally won’t cover you if you choose to cancel a trip over fear of the coronavirus. 
  • Credit card trip cancellation insurance may apply, BUT only if you’re travelling to a region under a Level 3 or Level 4 travel advisory from the Government of Canada. 
  • Trip cancellation insurance may have certain time restrictions – i.e. if you booked travel after an advisory was already issued or your flight is several months away (later than August, for instance), then your claim may not currently be accepted. Policies do vary by card.
  • Keep in contact with your airline. An increasing number are offering to waive change fees, allowing you to reschedule a trip to another date with no penalties.
  • As COVID-19 enters pandemic levels, it’s unclear if and how insurance policies will change.

*The COVID-19 outbreak is an evolving issue, and this article is meant to provide general information – not legal advice.

Some general info about credit card travel insurance

Many of the best credit cards in Canada come with comprehensive travel insurance with close to a dozen types of coverage built-in at no extra cost. For instance, many cards offer out-of-province medical emergency insurance that’ll cover your hospital bills if you fall sick while abroad. And baggage loss insurance which can compensate you hundreds of dollars if your airline loses your luggage.

It’s important to note that not every credit card has travel insurance – most no annual fee and low interest cards don’t, for example – so be sure to read up on exactly what your specific card offers. 

If your card has travel insurance, you’ll typically have to pay for the entire cost of the travel booking with your card for its coverage to kick in. Additionally, if you have a pre-existing condition or are over the age of 65, your card’s travel insurance will be limited or won’t cover you at all.

In terms of the coronavirus, the type of credit card travel coverage that’s most asked about is trip cancellation insurance.

If you already have travel plans in place but are forced to cancel tickets and reservations before the departure date, trip cancellation can help reimburse you for all or most of the cost. That includes non-refundable deposits at hotels or fees for cancelling a flight.

Trip cancellation won’t kick in for any reason though.

The cause of cancellation has to fall under one of the eligible reasons listed under your card’s insurance policy, which usually cover medical and non-medical emergencies like:

  • If you fall ill or are injured before a trip and a physician deems you unfit for travel
  • Unforeseen natural disasters or severe weather conditions

In terms of the coronavirus, things get a bit tricky as insurance won’t cover cancellations due to precautionary measures, like fear of contracting the virus.

Will my credit card travel insurance cover a trip cancellation if my destination is affected by the coronavirus?

In short, trip cancellation insurance:

  • Won’t cover you solely because you’ll be travelling to a country that’s affected by the coronavirus.
  • May cover you if you’re cancelling travel to a region that has either a Level 3 or Level 4 travel advisory from the Government of Canada. 

The list of countries affected by the coronavirus is long and continuing to grow. At the time this was written, Canada has over 100 confirmed cases and our neighbours to the south have over 900. All that said, your credit card’s trip cancellation policy won’t cover you if you cancel travel bookings simply because the country you’re visiting is affected by the coronavirus. Rather, specific regions – and whether they carry a travel advisory from the Government of Canada – is what matters.

The Government of Canada issues four levels of travel advisory:

  • Level 1: Practise usual precautions
  • Level 2: Practise special precautions
  • Level 3: Avoid non-essential travel
  • Level 4: Avoid all travel

You can find up-to-date travel advisory information from the Government of Canada here and here.

According to several credit card insurance policies, only advisories that state “Avoid all non-essential” or “Avoid all travel” are eligible for trip cancellation insurance. Policies can vary though, so be sure to read up on the terms of your specific credit card.

Timing plays a big role too, and the travel advisory must have been in place after you booked and still in effect at the time you cancel.

The situation around COVID-19 is constantly evolving, and government travel advisories and the regions affected aren’t set in stone, so you’ll want to monitor the situation the closer you approach your travel date. 

In the case of my upcoming trip, my layover in South Korea is in the capital city of Seoul, which currently carries a Level 2 travel advisory. Only the South Korean regions of  Daegu and Cheongdo carry Level 3 Warnings, which are both places I won’t be visiting. That rules out my ability to submit a trip cancellation claim.

Before checking your insurance, contact your airline

Before you pick up the phone to dial the number on the back of your credit card or rush to fill out a claim, start by contacting your airline or hotel provider to get a clearer picture of their cancellation fees, itinerary changes, and evolving policies.

Some airlines have already begun cancelling or suspending flights to certain hard-hit areas, in which case you may be entitled to a full refund. In other cases, airlines are offering to waive change fees allowing people to reschedule flights to another time of the year without penalties. 

Terms and conditions are different across airlines, and given the spread of the coronavirus, policies and travel advisories are now in a state of constant flux. So, make sure you stay in the loop with your airline.

What you need in order to file a trip cancellation claim

If you’re travelling to a region that is under a Level 3 or Level 4 warning from the government and want to file a claim, here’s some important information to know:

  • You must have paid for the entire cost of the flight ticket or hotel stay with your credit card.
  • Travel advisory warnings have to be in place after you booked your flight and still in effect at the time you cancel.
  • You must cancel your trip before you file a claim.
  • Once you cancel the trip, you must contact your card’s insurance provider as soon as possible.
  • You may have to provide additional documentation, so keep all your travel info close at hand.
  • Trip cancellation insurance usually has maximum coverage amounts (i.e. $1,500 per person up to $10,000 per trip).
  • Most credit cards won’t cover you if you’re over 64 years old or have a pre-existing condition.

What if I fall ill with the coronavirus?

If you fall ill with COVID-19 in Canada prior to your trip, your credit card’s trip cancellation insurance may cover you – provided you make the claim as soon as possible and provide documented proof from a physician. You could also be covered if you cancel your travel plans because you’re under quarantine or an immediate family member or the person you’re travelling with is diagnosed with the virus.

If you fall ill while abroad, your credit card’s travel medical emergency coverage may cover your hospital bills and other medical expenses – as long as you’re not visiting a region under a Level 3 or Level 4 travel advisory. Policies do vary by card but usually amount to around $1 to $5 million in medical emergency coverage for trips of between 15 to 25 days. Since this insurance has a time limit, you may not be covered for the entire period you’re away. If you do fall ill, make sure to contact your credit card company as soon as possible as claims typically have to be filed within 48 hours, and check if purchasing extended coverage is an option.

Travel insurance and the coronavirus: An evolving issue

The outbreak of COVID-19 has governments and airlines scrambling, and that makes things far murkier on the insurance front. 

For one, certain insurance providers like Manulife and TuGo, have now designated COVID-19 as a “known event.” Since travel insurance is meant to cover the unknown and unexpected, and the risks of coronavirus are now widely evident, the known event designation gives them some leeway to adjust certain aspects of their coverage. Namely, those two insurance providers now no longer accept COVID-19 related trip cancellation claims for policies purchased after March 5th.

It’s unclear how other insurance providers and how credit card travel insurance will adjust.

Additionally, COVID-19 has put serious financial pressure on airlines to the brink of potential bankruptcy. The president of Korean Air, the airline I booked with for my upcoming flight, has been quoted as saying “if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival.” If the airline were to go bust, I wouldn’t be able to file a trip cancellation claim and would have to contact my credit card company to go through a different (and less certain) claims process.

Simply put, there isn’t a one-size-fits-all answer to the question of travel insurance and the coronavirus. Be sure to read the terms and conditions, reach out to your airline and credit card provider for updates on cancellation and insurance policies, and prepare to be put on hold with customer service for a while.

What are your other options in the wake of the coronavirus?

If your current card’s insurance policy won’t help you save on travel cancellations, there are a few other options you could consider.

As we touched on earlier, one avenue is to contact your airline and ask to reschedule your trip to another time of the year. Numerous airlines are now offering to move your travel dates with no penalties. Depending on how flexible your travel plans are and how the coronavirus situation evolves, it could be one helpful solution. Keep in mind though, there may be limitations in terms of possible date changes.

You could also consider purchasing separate Cancel For Any Reason (CFAR) coverage, which as you can guess, acts like trip cancellation insurance that you claim for virtually any reason. CFAR isn’t offered by credit cards and has to be purchased separately. While it can be quite expensive and often has to be purchased around the same time you originally booked your flight, it can offer some peace of mind.

The bottom line

Credit card travel insurance can help cover you for a range of unexpected emergencies while flying abroad. But, when it comes to COVID-19 and cancelling your travel bookings, you generally won’t receive reimbursements.

With my own upcoming trip to Malaysia, I’m waiting to hear for updates from my airline, but if push comes to shove, I’m prepared to pay the over $300 in cancellation fees.