Covid cancellation clause catches 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 underscored the importance of travel insurance for those planning to leave.

However, a relatively unknown but important travel insurance clause could see many lose thousands on holiday expenses.

Before Covid, pandemics and outbreaks of disease were excluded from most travel insurance policies as they were considered too difficult to price or simply too risky due to their unpredictability.

However, since Covid most insurers now offer health insurance for travelers contacting Covid and some also offer trip cancellation insurance in certain circumstances.

However, there is a little-known clause that could affect some Australian travelers who take out policies with insurance companies such as Cover-more and Easy Travel Insurance and then have to cancel their holiday due to Covid; and it affects those who purchase coverage less than 21 days after the start of travel.

Natalie Ball, Director of, explained: “Several insurers offer cancellation insurance for your prepaid deposits and expenses should you fall ill with Covid before or during your trip.

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

So if you booked your December flights in October but waited until two weeks before you left to get your insurance, 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 customers who had a policy prior to those 21 days would be covered up to the full cancellation benefit listed on their policy.

“If you bought your policy early or before the 21-day deadline, you are entitled to all of your prepaid and non-refundable travel expenses, regardless of when they were made.

“If travelers buy cover too late, travelers will get stung.”

She said the key to not getting caught is getting travel insurance at the same time you buy a trip.

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

On the other hand, any bookings made after purchasing travel insurance early would be eligible.

“If you were to pay for your accommodation after purchasing travel insurance, you would be entitled to reclaim those costs. So remember that it really pays to get travel insurance early if you book your vacation in advance.

“Basic insurance starts at around $10 to $20 a day. When you compare that to the thousands of dollars spent on a typical trip abroad, travel insurance is a no-brainer.”

Finally, Ms Ball notes that insurers usually offer Covid cancellation insurance as an added extra, which is worth considering in certain cases.

“With airfares and travel expenses increasing, this coverage can be worthwhile when your prepaid expenses are in the thousands,” she said.

The government’s Smartraveller reiterates this advice on its website, advising to buy early.

“There are cooling off periods for Covid-19 cancellation protection so it’s best to take out your travel insurance at the same time you book your trip. Some insurers may only cover cancellation if you have tested positive for Covid-19 and the policy was purchased more than 21 days before your intended departure date.

“The further in advance of your departure date you take out travel insurance, the more you’re likely to pay for it, but you’re covered from the moment you take out your policy.

“For example, if you buy insurance two months before your flight, you effectively have cheap coverage for anything that affects your travel plans during those two months.

“If you pay for your trip six months in advance but only take out an insurance policy two weeks before you travel, you may not be covered for cancellation costs if you contract Covid-19.”
However, it is cautioned against reading the fine print.

“The list of travel insurance disputes filed with the Australian Financial Complaints Authority (AFCA) reveals a battlefield of unread or misinterpreted terms and conditions. Between July 1, 2020 and June 30, 2021, the AFCA received more than 2000 travel insurance complaints related to Covid-19.

“Not all travel insurance is created equal, and the wrong policy can be almost as bad as no policy at all.”

Smartraveller found that one in four Australian travelers experienced an insurable event, including flight or tour cancellation, or received medical treatment, on their most recent trip abroad.

Australian travelers filed almost 300,000 insurance claims in 2018-19, the last financial year before the Covid-19 travel bans. Almost 90 percent of this was paid out.

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