Covid cancellation clause catching Australian travellers

With the holiday season fast approaching, an unfortunate surge in Covid cases, particularly in states like New South Wales and Queensland, has once again highlighted the importance of travel insurance for those planning to leave.

However, a relatively unknown but important travel insurance clause could put many at risk of losing thousands in holiday expenses.

Prior to Covid, pandemics and disease outbreaks were excluded from most travel insurance policies because they were deemed too difficult to price due to their unpredictable nature, or simply considered too high a risk.

Since Covid, most insurers now offer medical cover for travelers who contract Covid, with some also offering cancellation cover under certain circumstances.

However, there is a little known clause that may affect some Australian travelers who take out policies with insurance companies such as Cover-more and Easy Travel insurance, and end up having to cancel their holiday due to Covid; and it concerns those who purchase cover less than 21 days after the start of their trip.

Natalie Ball, director of, explained: “Several insurers offer cancellation coverage for your prepaid deposits and charges if you are faced with Covid before or during your trip.

“However, there is a caveat that some brands have applied to policies purchased within 21 days of your departure date. In this case, you may only be able to recover costs incurred after your policy purchase date.”

So if you booked your December flights in October but waited up to two weeks before leaving until you took out your insurance and then got Covid and had to cancel, you may not be covered for the cost of the flights.

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However, Ms Ball says that customers who purchased a policy before those 21 days would be covered up to the full cancellation benefit stated on their policy.

“If you purchased your policy in advance or before the 21 day period, you are eligible to claim all of your prepaid and non-refundable travel expenses, regardless of when they were incurred.

“Buying coverage too late will sting travelers.”

She said the key to avoiding getting caught is to get travel insurance while buying your trip.

“The way this clause works is to deter you from buying travel insurance too late.”

On the other hand, all bookings made after buying travel insurance early can be claimed.

“If you were to pay for your stay after taking out travel insurance, you could reclaim those costs. So keep in mind that if you book your holiday in advance, it really pays to get travel insurance early.

“A basic policy starts at about $10-$20 a day. When you compare that to the thousands of dollars spent on a typical trip abroad, travel insurance is a good idea.”

Finally, Ms. Ball notes that insurers usually offer Covid cancellation cover as a perk, which is worth considering in certain cases.

“With airfares and travel expenses rising, that coverage can be a worthwhile expense if your prepaid expenses run into the thousands,” she said.

The government’s Smartraveller echoes this advice on its website and advises buying early.

“There are cooling-off periods for the Covid-19 cancellation cover, so it is best to take out your travel insurance at the same time as booking your trip. Some insurers may only cover cancellation if you test positive for Covid-19 and the policy was purchased more than 21 days before your scheduled departure date.

“The further away from your departure date you take out travel insurance, the more you pay for it, but you are covered from the moment you buy your policy.

“For example, if you buy insurance two months before you fly, you basically have low-cost coverage for all the events that affect your travel plans in those two months.

“If you pay for your trip six months in advance, but don’t take out insurance until two weeks before departure, you may not be covered for any cancellation costs if you catch Covid-19.”
However, it cautioned to read the fine print.

“The list of travel insurance disputes submitted to the Australian Financial Complaints Authority (AFCA) reveals a battlefield of unread or misinterpreted terms and conditions. Between July 1, 2020 and June 30, 2021, AFCA received more than 2,000 travel insurance complaints related to Covid-19.

“Not all travel insurance policies are created equal, and the wrong policy can be almost as bad as none at all.”

Smartraveller found that one in four Australian travelers experienced an insurable event during their last overseas trip, including a flight or tour cancellation, or medical treatment.

Australian travelers filed nearly 300,000 insurance claims in 2018-2019, the last financial year before the Covid-19 travel ban. Almost 90 percent of that was paid out.

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