The latest Omicron variant is forcing many travellers to alter their holiday or business travel plans overnight. About 33,000 flights that were due to fly between December 2021 and February 2022 under air bubble arrangements have been cancelled globally. Aviation regulator DGCA has extended the suspension of scheduled international passenger flights in India till February 28, 2022.
If you too are disappointed and have called off your holiday due to the looming Covid-19 fear, then take a closer look at your travel insurance policy document.
Even though you may have read travel insurance banners and advertisements announcing coverage in the case of “Trip cancellation,” “Trip curtailment” etc., it’s important to understand that alteration in travel plans due to your own personal discomfort does not mean you can easily book a non-refundable flight and hotel reservations only to claim the cancellation damages through insurance.
Your claim may not be honoured unless specific conditions are met.
Did you cancel on your own?
To be sure, a travel insurance is a must-have before you fly abroad, whether on a holiday or for work. Your travel insurance policy insures you against health-related emergencies, as well as baggage loss and trip or flight cancellations.
When you cancel your trip, ideally you are supposed to get your sum assured back. But this doesn’t happen always as there are numerous conditions.
“Your claim will not be processed if you decide to cancel your travel bookings due to the fear of contracting COVID-19. Cancellation due to changes in travel plans made by the insured basis convenience, are excluded under trip cancellation. Travel arrangements changed by the tour company too wouldn’t be covered unless the cancellation is due to a natural disaster,” says Adarsh Agarwal, Appointed Actuary, Go Digit General Insurance.
In fact, some policies don’t even allow cancellation even if your travel partner has got COVID-19 and you wish to call off your trip.
Or did your airline cancel?
The simple rule here is that if you yourself decide to cut the trip short then there would be deeper scrutiny. However, if the airline or the government of your destination country has forced a cancellation then the reason would be valid.
“If the airline cancels the flight due to government restrictions, then the cost attached would be reimbursed under insurance,” says Goel.
The valid conditions for acceptance of travel insurance claim for trip cancellation would be death or severe injury or illness of self or family), damage to residence, terrorist attack or natural disaster, visa being declined, re-appearing exams, loss of employment, theft of travel ticket.
Even when the policy condition is met, there are limited travel expenses that would be reimbursed by your insurance policy. “While the differential for the airline booking postponement would be permitted to be claimed, amount spent on hotel bookings would not be available for insurance claim,” says Naval Goel, founder and CEO of PolicyX.com.
On the contrary, there have been few cases where insurers offered an extension in insurance policy when the policyholder was stuck in the foreign land due to flight cancellations.
Type of policy
Another condition applicable under travel insurance would be the type of policy that you hold, which is linked to where and how you purchased your travel insurance cover.
“Not all retail (purchased by individuals directly) policies offer the trip cancellation feature. Some of the group covers offer this benefit. But that wouldn’t cover the expenditure on hotels,” says Sanjay Datta, Chief - Underwriting, Reinsurance, Claims & Actuarial at ICICI Lombard General Insurance.
Elaborating the policies that would offer this feature, a senior general insurance official not willing to be named, says, “We do not offer the trip cancellation feature in the standard retail products. Policies offered to a group such as online travel portals, corporates (for the purpose of employee travel for official trips), airlines, etc. cover trip cancellations and the conditions are customised for every group. So, one must refer the policy document to understand what is covered.”
Received compensation from airline?
If a traveller has received compensation for flight delay or cancellation from an airline, then there are chances that airline compensation amount would be deducted from the insurance component before honouring a claim. But the specifics would be driven by the clause included in your policy.
Digit Insurance, for instance, disburses the insured amount as soon as flight delay intimation is received. However, in the event of cancellation, “Airlines usually compensate passengers and in such cases the insurer doesn’t pay for the same,” says Agarwal.
Another insurance company denies deducting any airline compensation amount. “Insurers do not deduct the compensation offered by airlines for COVID-19 related delays and cancellations or baggage loss,” as per Datta.
Few travellers opt for the feature
Even though this feature of trip cancellation seems to be beneficial, few travellers purchase insurance for the compensation involved in the event of cancellation.
Datta explains, “Typically, the insured do not purchase travel insurance for the trip cancellation feature, but for medical insurance benefits and allied coverage such as air lift.”