2 Canadian insurance companies stop covering coronavirus-related trip cancellations

Two major Canadian travel insurance providers Manulife and TuGo will no longer reimbursenew customerswho need to cancel their tripsdue tothe coronavirus outbreak.

Travellers with regular trip cancellation insurance typically have been able to get reimbursedif,after booking theirtrip, Ottawa issued a coronavirus-related advisory to avoid non-essential travel to their destination.

However, Manulifeand TuGo will no longer offer this type of coverage. Both companies told CBC News that the coronavirus is now a "known" issue and therefore cancellation coverage no longer applies as it's designed for unexpected mishaps.

Travel insurance brokerMartin Firestonesays he believes other companies will likely follow suit, to avoid the huge costs that could arise asthe coronavirus spreads globally.

"They are opening themselves up to millions of dollars of claims that they will have to pay unless they invoke this," said Firestone,with Travel Secure in Toronto. "If this thing blows up and it becomes a pandemic, all these countries are going to get on the [no] non-essential travel list."

TuGo'schange went into effect on Wednesdayfor policies purchased on or after that day.

"We've identified COVID-19 (coronavirus) as a known circumstance," said spokespersonMelissa Kaerne in an email. "That means it is no longer considered sudden and unexpected, as it is a global health issue."

Manulifeexpressed a similar position in an email. The company confirmedthatstarting Thursday,customers who purchase travel insurance will no longer be reimbursed for coronavirus-related trip cancellations.

Manulife said that the exception to the rule would be travellers who purchasethe "Cancel For Any Reason" (CFAR) option that provides coverage for any type of trip cancellation.

The CFARoptioncomes at an added cost and generally only covers up to 75 per cent of a cancelled trip.

No longer unexpected

The federal government has issued coronavirus-related advisories againstnon-essential travel toChina, Iran, northern Italy and parts of South Korea.

As the coronavirus spreads, that list will likely grow, but neither Manulife nor TuGo will cover new customers who book trips to any destinations that get added to the government's list.

Industry expert Will McAleer says cancellation insurance is supposed to cover sudden and unanticipated events, such as falling ill and not being able to take your trip. He said companies cutting off coronavirus cancellation coverage have likely deemed that it no longer fits in that category.

"They appear to be saying that, 'Hey,you know about it,'"said McAleer, executive director of the Travel Health Insurance Association of Canada.

"We've now seen [the virus] spread from country to country and as a result, thinking that it could spread to yet another country should certainly be something that we can all expect."

Firestoneadvises travellers who haven't already purchased insurance and plan to travel during the coronavirusoutbreak to start shopping around, as he anticipates other providers will also change their cancellation coverage.

"I think they're all going to jump on the bandwagon."

While some travellers may feel the new development is unfair, Firestone points out that travel insurance was designed to cover the odd mishap, not large numbers of travellers cancelling their trips which could become the case with the coronavirus outbreak.

"That's changed the odds," he said. "Everyone's got these sort of loss-ratios they work on and they all got thrown out the window with this."

Meanwhile, bucking the trend, Air Canada, WestJet andAir Transathave each announcednew policiesthat actually broadencoverage for travellers during the coronavirus outbreak. Air Canada and Air Transat passengers booking a flight between March 4 and 31 for travel over the next 12 months can nowmake changes at a later date, free of charge.

WestJetpassengers booking flights betweenMarch 3 and 17 for travel through June 24will also be allowed to make a flight change for free.