Kiplinger’s Personal Finances: Pandemic Travel Insurance | Economic news

The pandemic has introduced a disconcerting element of gambling into travel planning. But you can reduce the risk of losing money when your trip is canceled or delayed by purchasing travel insurance.

Standard travel insurance limits have increased the appeal of a previously obscure upgrade to standard travel insurance known as “cancel for any reason” policies. This option, while significantly more expensive, is more likely to cover the type of cancellations that COVID-19 has trivialized.

Megan Moncrief, director of marketing for travel insurance aggregator Squaremouth, said CFAR has become the go-to plan for more travelers.

Traditional travel insurance, she explains, does not cover the majority of pandemic-related claims. And a recent study by Squaremouth found that only 30% of pandemic-related claims were made by people who canceled their trip because they actually contracted COVID. This is the only type of pandemic claim that would be covered by most standard travel insurance policies.

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The remaining 70% of claims were for related reasons, including border closures and quarantines, but these were excluded from non-CFAR policies.

A travel insurance plan from TravelEx for a $12,000, nine-day, trip for two people to Canada, Italy or France in June costs $522, including COVID cancellation protection and trip interruption protection. CFAR travel insurance for a similar trip from the same insurer would cost $730.

CFAR insurance now accounts for about 8% of sales, but that’s down from 28% at its peak in 2020, Moncrief said.

Travel insurance policies with a CFAR top-up should generally be purchased within two to three weeks of the first payment for the covered trip, according to Squaremouth. But some policies that only cover cruises offer CFAR at any time before a final payment is made for a voyage.

Insurers now require policyholders to first seek reimbursement from the travel service provider, such as the airline or cruise line, before filing an insurance claim.

Sometimes, Moncrief says, an airline may want to issue a credit rather than a refund. She says insurers will encourage travelers to seek reimbursement before considering providing cover for such an event.

Insurers have made a number of adjustments in response to the pandemic. At first, Moncrief says, travel policies did not cover medical care for pandemic illnesses. But that quickly changed.

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