By Weston Pollard | The lawyers Daily
As Canadians ready themselves for the spread of the global virus COVID-19, the whiplash-effect of cancellations and closure announcements continues at a dizzying speed. Reduced hours for businesses, the prospect of prolonged closures and a workforce jittery about working closely together is having an impact on all sectors of the Canadian economy. The travel industry stands out as one of the hardest hit to date because of COVID-19, and as a result, travel insurers are changing the way they do business.
The first effect of COVID-19 on travel insurance policies began in earnest on March 4, when Manulife and TuGo issued statements indicating that neither company would provide coverage for trips cancelled due to the virus. Policies that were purchased before midnight on March 3 would continue to include trip cancellation coverage, but policies purchased after that time would not include such coverage.
On March 13, The Globe and Mail reported that two of Canada’s largest travel insurers, Manulife and Allianz Global, would no longer cover emergency medical expenses for travellers who visit countries for which the government has issued a COVID-19 travel advisory prior to their departure date. Also on March 13, the government of Canada issued a “global travel advisory” to Canadians to avoid all non-essential travel outside Canada. This was in addition to a March 9 warning that Canadians should avoid all cruise ship travel.
Manulife confirmed that it will not cover medical expenses for customers who travel to destinations that were the subject of a “high-risk” government COVID-19 travel advisory at the time of departure. No definition of high-risk accompanied the Manulife statement.
Adding to the confusion, the government of Canada does not issue travel advisories with a risk index but rather classifies destinations based on four levels. Level 1 advises travellers to use “regular precaution” when travelling to that particular country, while level 4 advises travellers to “avoid all travel” to that destination. Currently, the global travel advisory in place puts most countries at a level 3, which advises travellers to “avoid non-essential travel” to those countries.
Allianz Global Assistance has provided a bit more clarity in its announcement, stating that the company will not cover emergency medical treatment of those who contract COVID-19 in a country that has a level 3 or 4 travel advisory related to COVID-19 before they left on their trip.
No mention was made, however, of what will happen to those who may have contracted the virus before travelling with symptoms starting after arriving at their destination. Current information on COVID-19 released by Health Canada suggests an incubation period of anywhere from two to 14 days before symptoms start. With the virus being transmitted worldwide and such a wide range of incubation, there is no indication of just how Allianz Global can determine when and where the virus was contracted.
Both insurers rely on the “known-risk” exclusion provisions of their policies, meaning that the insurers take the position that COVID-19 exposure is now a widely known risk and not an odd, unexpected mishap that travel insurance and trip cancellation insurance were designed to cover.
Johnson Insurance, which offers a popular travel plan for snowbirds, has a requirement in its policy that coverage ends 10 days after a travel advisory is issued. Johnson has indicated to its customers that they should return to Canada as coverage for out of country medical emergencies will not be covered.
What can insured travellers do?
Here are a few tips:
- Read your policy thoroughly, including all definitions. Identify any additional policy endorsements that may have been purchased. Manulife, for example, has a separate policy endorsement that can be purchased called “Cancel for Any Reason,” which reimburses customers up to 75 per cent of their covered cancellation losses, an endorsement that continues to be offered.
- Contact your insurer. For those who have travelled or still plan on travelling and have purchased emergency medical coverage, contact your insurer and find out if you will be covered. As things are constantly in flux, endeavour to get a response from the insurer in writing. Some insurers other than Allianz Global and Manulife continue to offer emergency medical coverage for those who have travelled to COVID-19 risk zones, though that list is shrinking. Confirm if you are covered.
- Look to your group benefits. If you have group medical benefits through your employer, review that policy. Many insurers like Manulife, SunLife & CanadaLife have emergency “out-of-Canada” travel coverage. Those group plans remain unchanged.
- Be smart. Shop around. Review travel policies online before purchase. Contact the company before you buy, tell them where you are going and ask specifically whether you will be covered for emergency medical treatment related to COVID-19 and trip cancellation due to COVID-19.
- Look for alternative relief. Many airlines are waiving rebooking fees, while hotels are waiving cancellation fees. Don’t just count on your travel insurance to cover you for medical issues arising out if exposure to COVID-19 or refund a trip cancelled because of COVID-19.
The global reach of COVID-19 and the speed at which it has spread has caused travel insurers to rethink coverage. Intended for unforeseen circumstances, insurers are simply unable to manage the sheer cost of mass cancellations and mass hospitalizations. Expect future travel policies to be updated to specifically exclude travel losses associated with a known pandemic, meaning that these exclusions are likely here to stay.
Weston Pollard is a partner at Edwards Pollard LLP, a boutique litigation firm in Oakville focusing on personal injury, insurance denials and employment law.