Will travel insurance policies cover covid-19 if you travel abroad?

If you are planning to fly abroad in the coming days, buying travel insurance could be one of the first things you might look at amid the covid-19 pandemic. While having travel insurance is a must to ensure you’re covered against any emergencies that may come up, will the policy pay for medical expenses triggered by the infection?

We spoke to insurance experts to understand the terms and conditions. Amit Chhabra, health business head, Policybazaar.com said, like any other illness, covid-19 will be covered but only in the case of emergency hospitalization.

“Isolation or quarantine as a precautionary measure or for mild symptoms will not be covered under travel insurance. Only emergency hospitalization procedures will be paid for by the insurer,” said Chhabra. This means if you’ve been advised isolation or institutional quarantine, then the costs for the same will have to be paid out of pocket.

Insurance companies while selling the policy may ask you whether you’ve been exposed to someone who tested positive for covid-19 and may take a call on whether they want to sell the policy or not. Also, premiums could see a spike depending on the location you’re travelling to and the situation there in terms of the intensity of the pandemic. “Even before covid-19, insurers would charge different premiums based on the country the policyholder plans to travel to. For instance, premiums for someone travelling to the US could be higher compared with premiums for south-east Asia,” said Animesh Das, head of product strategy, Acko General Insurance.

Further, because the revision of premiums requires the regulator’s approval, insurers may choose to deny travel insurance if you’re travelling to a particular country which the insurer finds high-risk, given the ongoing covid-19 crisis.

“Companies could also avoid selling fresh policies for a few countries where the risk of covid-19 infection is high. This does not require regulatory approval so insurers can choose whether they want to offer the policy or not based on their underwriting norms,” added Das.

As of now, there is no advisory by the government on travelling to countries where flight routes are operational but in case an advisory comes up in the future, experts said insurers will have to pay if a claim arises because the policies were sold despite knowing the situation in the country to which the policyholder is flying.

Impact on demand and premiums

Travel insurance is not a much-evolved category in India and for the longest time, the premiums have been mostly flat, especially if you purchase through online travel agents (OTAs). However, experts believe that companies will be a lot more proactive now in terms of what they want to cover and at what price.

Das said there may also be some rejigging of products in the near future because OTAs and other travel partners may push companies to design better products to ensure that potential travellers are convinced about their safety and protection. Further, demand for travel insurance is expected to increase sharply once travel resumes fully.

“Around 20% of the total travellers bought travel insurance in the pre-covid world but now up to 70-80% could buy insurance. Also, more countries may now consider making travel insurance mandatory,” said Chhabra.

Some experts believe with rising demand, there could also be an increase in premiums in due course. “There could be an increase in premium due to two factors. First is the increase in the incidence rate of travel-induced sickness due to covid-19 and second, reduction in the overall premium collection due to a decrease in leisure travel,” said Naval Goel, founder and CEO, PolicyX, an online insurance aggregator.

Das said given that the number of travellers will be low for a while and the nature of the trips would be risky, premiums could go up to subsume costs.