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Travel Advisory: what you need to know about COVID-19 travel insurance

22 Mar 2021

As the potential of a trans-Tasman travel-bubble becomes more likely, the Insurance Council of New Zealand has today issued clarification on changes to travel insurance in response to the global pandemic COVID-19.  

Tim Grafton, CE Insurance Council of New Zealand (ICNZ), says the sector has responded to the new reality of global travel amid the significant uncertainty and limitations COVID-19 presents.

“Insurers have constantly looked at ways to support their customers for the day the travel bubble becomes a possibility, introducing tailored policies that provide cover for a range of COVID-19 related claims.

“In addition to the normal travel insurance cover, some policies may include cover for specific COVID-19 claims such as cancellation costs if you contract COVID-19 and can’t travel, costs to return home if a relative gets sick with COVID-19 or costs if you get sick with COVID-19 and need to quarantine while overseas. Some also cover reasonable costs if the person you are supposed to stay with gets COVID-19 and you need to find alternative accommodation.

“However, as discussed over the last few days, border closures imposed by a government are not covered by any insurer as it is simply not possible to develop a product that accounts for the uncertainty and the level of risk this presents.

“Insurers and customers need certainty of the exact dates and times borders open or close so that they know when cover is available and when it is not.”

ICNZ stresses that it is still important to purchase travel insurance at the point of purchasing your travel for the wider cover it offers.

“Travel insurance is still available to purchase and offers cover for a variety of unforeseen events as outlined in individual policies – such as a broken leg, theft or lost baggage or the impacts of a significant weather event.”

As each policy will differ, ICNZ strongly advises anyone purchasing travel insurance to read the policies thoroughly and to ask the insurer any questions they may have about what is and isn’t included.

At present policies won’t cover:

  • Cancellations to travel caused by government-imposed lockdowns
  • Costs if the government imposes a blanket quarantine
  • Travel delay caused by COVID-19
  • Border closures due to COVID-19
  • Travel to any other countries where there is still a ‘do not travel’ alert in place.

Cover that might be offered by some insurers with specific COVID-19 extensions include:

  • Cancellation costs if you get sick with COVID-19 before you go away
  • Costs to return home if a relative gets sick with COVID-19
  • Costs if you get sick with COVID-19 and must quarantine
  • Reasonable accommodation costs if the person you were supposed to stay with gets COVID-19
  • Cancellation costs if leave is revoked – if you are an essential health worker and your leave is revoked due to COVID-19 you can claim the non-refundable costs
  • Cancellation costs for denied boarding due to a positive COVID-19 test at the airport - you and your travelling companion can claim the non-refundable, prepaid cancellation costs provided that a public health authority directed you and you did not have knowledge or awareness of your positive test result at the time of your policy purchase
  • Cancellation due to being a close contact with someone with COVID-19 – Cancellation or amendment costs for a prepaid trip subject to the cancellation benefit limit on the policy if they have been directed to quarantine by a public health authority because they deemed to have had close contact with someone diagnosed with COVID-19 and can’t go on their trip.