Published on: 14 July 2020 by Michael Lamb
With summer here this is traditionally the time of year that many of our clients head overseas on their annual summer vacation. This is when CCW Global would normally suggest that you consider purchasing travel insurance ahead of any overseas journey; as these policies are generally low cost and extremely effective in providing a suitable level of protection should you encounter any difficulties while away from Hong Kong.
However, with all the uncertainty in the world at the moment right now the question needs to be asked, should you really be thinking about travel insurance this summer?
One of the biggest areas of confusion in relation to Insurance Coverage is that insurance doesn’t cover existing threats.
Travel insurance generally covers a range of simple risks that you may encounter on your journey including; trip cancellation, trip interruption, delay of luggage, personal accident protection, low limit life insurance, simple health insurance, and more. This makes travel insurance a very good option for people who want to ensure that they are able to receive assistance in a worst case scenario while they are overseas, but the streamlined benefits offered by the policy often come attached to some fairly extreme exclusions.
One of the reasons that travel insurance is such a useful type of coverage is because it is simple and low cost. The way the insurance companies are able to provide policies of this type is by ensuring that they have ultimate control over the policy. Exclusions commonly found on travel insurance policies include exclusions for claims in relation to sky diving, extreme sports, terrorist attacks, psychological disorders, and illegal activity. Most travel insurance products will also exclude any claims made in relation to a pandemic or other healthcare crisis.
These exclusions allow the insurer to cancel the plan or deny claims, even if you have paid a premium for the policy. If the claim is related to a named exclusion then the claim is generally not payable.
Under travel insurance, only risks which have not occurred at the time you purchased the policy would be covered under the plan. For example, a number of international travel insurance companies are using either January 22 or March 11 (when the WHO announced the Coronavirus pandemic) as the dates for excluding travel cancellation claims in relation to the Covid-19 Coronavirus.
If you purchased your policy and contracted the Covid-19 Coronavirus prior to January 22nd, and you had an existing travel insurance policy that covered you against trip cancellation due to medical concerns, then this claim would have been honored. But for individuals or groups who purchased their coverage after the announcement of the global pandemic, or travel restrictions being implemented by national governments, then Covid-19 coronavirus would not be an acceptable reason for a claim under the travel insurance policy.
This is not to say that travel insurance has no value, but rather taking travel insurance to avoid forfeiting pre-purchased and irrecoverable costs because of Covid-19 concerns is not possible.
The problem of Covid-19 is likely going to impact individuals holding an annual travel insurance plan much more than people who purchased single trip products.
This is due to the fact that while an annual plan covers as many trips as you may take overseas during the course of a given year, the protection offered by an annual plan does not actually take effect until the policyholder physically boards a plane and departs from Hong Kong. While an annual travel insurance policyholder may have purchased their coverage prior to the announcement of the global pandemic made by the WHO in March, once the announcement was made each subsequent trip they take under the plan is now subject to the NGO and governmental travel guidelines.
As such, people who purchased Single Trip plans are more likely to have a better understanding of the situation and whether they are able to cancel for a reason like the Coronavirus – if a person had a single trip plan, the pandemic status was withdrawn globally, and then they caught the coronavirus this is a situation where the claim would likely be honored, even with the existence of a pandemic.
At this time purchasing an annual travel insurance plan is not the best option; simply because of the lack of utility in the policy.
If you are planning on travelling overseas this year it is important to remember that travel insurance still covers you against the routine risks that you are likely to encounter on your journey. From suffering a car accident, to having your luggage stolen on arrival at your destination, there are a large number of risks that travelers face every single day. However, the big, scary risks that are currently at the front of current events (like the Covid-19 Coronavirus or political unrest) are ongoing, and consequently not insurable under a travel insurance plan.
So the question of “should you be thinking about travel insurance” is really answered with “it depends.” If you’re going away CCW Global always recommends that you purchase comprehensive coverage, just be aware that Travel Insurance may not cover as much as it did before, and should your trip be canceled because of the Coronavirus you are likely going to be bearing the cost of both the insurance and the trip itself.
If you have any questions about buying or claiming travel insurance in the current climate, or if you would like to discuss your specific Covid-19 Coronavirus insurance needs in Hong Kong, please Contact Us today and speak with an expert Insurance Broker.