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Does Travel Insurance Cover Canceled Trips Due to a Viral Epidemic?

Carefully check the terms of a plan as you evaluate insurance options

Travelers wearing face masks in Hong Kong

Anthony Kwan/Getty Images

En español | Most basic travel insurance plans are not likely to cover policyholders’ costs of canceling planned travel to China — even though airlines and tour companies are canceling trips to the country, and the U.S. Centers for Disease Control and Prevention has advised against travel there during the deadly coronavirus outbreak that has infected thousands.

A typical travel insurance policy doesn't cover a traveler's decision to cancel due to trepidation about visiting areas hit with viral epidemics such as the coronavirus, Zika (the mosquito-borne virus that made headlines in 2016) or the SARS coronavirus scare in 2003, which began in China and later infected hundreds of Canadians — and scared off countless tourists — in the Toronto area.

But if you get sick while you're traveling, from the coronavirus or any other illness, most basic travel insurance plans include medical care and coverage if your sickness requires you to cut your trip short, as long as you bought your insurance before an epidemic has been declared. They also typically cover cancellation or interruption costs in the case of other unforeseen events, including terrorism, adverse weather events such as hurricanes, and natural disasters.

Some insurance companies explicitly state epidemics and pandemics as excluded reasons for canceling a trip.

Why? Because they're hard to evaluate in terms of risk and cost. “Insurance is there to cover things where the risk can be assessed,” explains Henrik Romberg, chief commercial officer at Generali Global Assistance. “Pandemics or epidemics tend to be extremely unpredictable and have a very broad geographic impact. As a result, insurers really lack the proper tools and underwriting guidelines to properly price such risk.”

"Cancel for any reason” coverage

The only way to be compensated when you need to change or cancel your trip to avoid a high-risk area during a viral outbreak is by purchasing a Cancel For Any Reason (CFAR) benefit with your travel insurance policy. CFAR coverage usually adds about 50 percent to the price of a basic policy, which averages 4 percent to 10 percent of a trip's cost, says Stan Sandberg, cofounder of TravelInsurance.com, a site for comparing and purchasing travel insurance policies. Older travelers, who may be more at risk of health issues, tend to pay at the higher end of that range.

There are eligibility requirements for CFAR coverage: You usually are required to buy it no more than 21 days after paying for your trip. You also can't cancel any later than 48 hours before your departure, and will only be reimbursed up to 75 percent of your prepaid, nonrefundable trip cost, says Meghan Walch, product manager for InsureMyTrip, another site for comparing and buying travel insurance policies. (Note that states regulate the U.S. travel insurance industry, so policy options vary; New York, for instance, doesn't allow the sale of CFAR insurance.)

If you haven’t bought insurance

As far as buying travel insurance now for a planned trip to China that you may cancel because of the coronavirus outbreak, you may be out of luck unless you opt for a CFAR policy. The insurance industry considers the coronavirus, or 2019-nCoV, a “known” event, as of Jan. 22. Just as you can't purchase insurance that would cover a trip disruption caused by an already named hurricane, once a virus is known, its presence is no longer an unforeseen event and there's no related coverage. Generali Global Assistance announced today that it will no longer write insurance to cover travelers to China for losses (illnesses) related to the coronavirus outbreak.

"If you bought before it became a known event and you get sick, you will be covered,” Romberg notes.

If you didn't buy travel insurance and want to cancel a trip to China to avoid the current epidemic, you may be in luck when it comes to your airfare: The major airlines with direct routes between the U.S. and China have been canceling some of these flights themselves (because of a decline in demand for travel to China, United has said), and are generally accommodating passengers’ changes and cancellations without penalty.

American Airlines and Delta Air Lines, for example, are allowing customers to change or cancel their flights to China for no charge through the end of February. United is waiving the fee for passengers wanting to change or cancel flights to Beijing, Shanghai and Chengdu through February, and to Wuhan, the city where the outbreak began, through March.

Policies are evolving as the virus spreads, however, so check with your airline directly for details.

Tour companies and cruise lines are also watching the situation carefully, and some have begun canceling or altering their itineraries. The nonprofit educational-travel company Road Scholar is canceling all programs in China through July and refunding participants on those programs. “We are in the process now of notifying everyone enrolled,” says JoAnn Bell, senior vice president of programs.

Royal Caribbean is among the cruise lines canceling imminent departures of China-focused itineraries and offering passengers full refunds. Viking doesn't have any sailings in China until March, it notes on its website, and is “monitoring the Wuhan coronavirus situation closely and will continue to do so in the coming weeks, heeding guidelines from the U.S. Department of State, the Centers for Disease Control and the World Health Organization.”

A growing number of hotels are waiving change and cancellation fees for bookings in China scheduled for the next few weeks. InterContinental Hotels Group is doing so for hotels in China, Hong Kong, Macau and Taiwan; Hyatt is waiving such fees at most of its hotels in China.

CDC Updates

To stay on top of the coronavirus’s spread, see the CDC’s latest news.

Anytime you’re planning to travel abroad, consider enrolling in the U.S. State Department’s Smart Traveler Enrollment Program (STEP) to receive alerts about emergencies (such as crime, terrorism, civil unrest, health risks or natural disaster) in the country you’re visiting.

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