Coronavirus: Can I still buy Cancel for Any Reason cover?

Planning to travel overseas soon and worried about travel insurance? While many policies now exclude coverage for cancellation due to coronavirus, there is one policy add-on that you could investigate. How does “cancel for any reason” cover work?

13 March. 2020, UPDATE: Cover-More suspended the sale of new Cancel for Any Reason add-on products in Australia and New Zealand from “end-of-day, Friday, 13 March”. 

In a statement, Cover-More Travel Insurance announced the suspension was “in the wake of the rapidly changing and escalating global impact of the coronavirus (COVID-19) outbreak”:

Cover-More CEO, Asia Pacific, Judith Crompton said Cover-More has made the decision to suspend sales of the CFAR product for an interim period while the company assesses the risk profile and immediate sustainability with Zurich, Cover-More’s underwriter in Australia and New Zealand.

“Cover-More is very proud of our CFAR product which we have pioneered in Australia and New Zealand since April 2018. And we absolutely want it to build into a long-term sustainable feature of our travel insurance offer in the Australian and NZ travel markets.

“We have not taken this decision lightly and we stress that we hope this suspension will enable us to keep CFAR in market in the longer term.

“We are in unchartered waters and unprecedented times for the travel industry with the global impact of the coronavirus (COVID-19) outbreak and we will continue to do everything we can to support our travel agents and partners and Australian and New Zealand travellers,” Ms Crompton said.

Suspension of CFAR sales will be effective by end-of-day Friday 13 March 2020 in Australia and New Zealand.

PUBLISHED 12 MARCH, 2020:

Coronavirus has been in headlines since late 2019, and was declared an official “Public Health Emergency of International Concern” by the World Health Organization (WHO) on 31 January after the virus – now called COVID-19 – started to spread across the globe.

For many travellers with insurance, this declaration had an impact on whether or not they could claim for medical or cancellation expenses related to coronavirus. That’s because from around that date, a policy term called “known event” came into play on a wide range of insurance policies sold in Australia.

Although insurers differ on which date exactly coronavirus was considered to be a “known event”, it’s now generally not possible to buy a new policy which would cover a traveller’s medical expenses if they were to become sick with coronavirus during their travels, Insurance Council of Australia spokeswoman Lisa Kable told Canstar. That’s because insurers consider that you are travelling even though you know that it’s possible you could have contracted the virus, as it’s now a “known event”.

“Insurance is there to cover people for unknown risks,” Ms Kable said. “Coronavirus is now a known risk.”

But what if you want to cancel a trip? If the Australian Department of Foreign Affairs and Trade (DFAT) has given a “Do Not Travel” warning about your destination country, such as China, you could be covered for some of your travel costs. However, if you are travelling elsewhere and the reason you wanted to cancel was because you were worried about contracting coronavirus, it’s most likely that you would not be covered for any cancellation expenses. That’s where a special type of add-on cover, known as Cancel for Any Reason (CFAR) cover, could potentially help.

For more: COVID-19 puts Australia on high alert

However, the situation is changing rapidly and you should check with your insurer when travel advice changes. This afternoon, the Department of Foreign Affairs and Trade (DFAT) declared that Australians should “reconsider their need to travel overseas”, elevating the travel advice warning to at least Level 3 for all countries. Fifteen countries – including China and many Middle Eastern and African countries – have been given a Level 4 “Do Not Travel” warning. This change in advice could have an impact on what travel could be covered by insurance policies.

“Contact your airline, travel agent or insurance company to discuss your travel plans and options for cancelling or postponing current bookings. Or to arrange flights back to Australia,” DFAT’s advice states. “For urgent consular assistance contact +61 2 6261 3305 from overseas, or 1300 555 135 from within Australia. For non-urgent queries contact smartraveller@dfat.gov.au”

What is Cancel for Any Reason cover and where can I buy it?

Ms Kable said that Cancel for Any Reason cover was only available from a small number of Australian travel insurance providers, as an “add-on” cost for specific travel insurance policies, usually with stringent guidelines. And if you already have travel insurance and haven’t bought this type of cover, it can’t help you at all now.

“This is not a ‘cover-all’ for all travellers by any means,” Ms Kable said. “It’s a product whereby if someone wants to add it onto their core travel insurance policy, it could give them the potential to cancel their trip for any reason.”

Travel insurance company Cover-More, which underwrites the product, states that while CFAR cover was not currently available to buy directly through Cover-More, it is available through “many travel agencies in Australia” and NRMA Insurance.

“To buy one of our travel insurance policies with the Cancel For Any Reason add-on, please visit or call your local Flight Centre, Helloworld, Magellan, or Travellers Choice travel agent,” the Cover-More blog states. “A number of independent travel consultancies also sell this add-on – please call or visit your local travel agent to find out if our product is available through their teams.”

Related article: How will coronavirus impact the economy, property market and interest rates? 

What are the conditions that apply to Cancel for Any Reason cover?

According to Cover-More, the rules that apply to CFAR cover include:

When to buy:

• Must be added on at the same time you buy your travel insurance – it can’t be added later.
• Cover will only apply for travel costs that you paid for after buying the policy, or costs you paid for in the 48 hours before you purchased the policy.
• It can only be bought if your departure is more than seven days from when you pay for your insurance.
• Once you have the cover in place, if you add more accommodation, transport or other items to your trip, you must add extra items 14 days or more before your departure date.

When it can be used:

Cover will only apply if the trip is cancelled more than 48 hours in advance of departure.

What does Cancel for Any Reason cover pay for?

CFAR does not cover all cancellation costs, according to Cover-More, and could depend on what Cancellation Cover is provided for under the base travel insurance policy:

• Cover is available up to the lesser of 75% of the non-refundable portion of your unused prepaid travel costs, or 75% of the Cancellation Cover you added.
• Payout is limited to $10,000 per policy
• Limits, sub-limits, conditions and exclusions apply (for example, read the NRMA PDS).

How much does Cancel for Any Reason cover cost?

The cost of CFAR cover depends on many factors, including where you are travelling and what sort of base travel insurance you have purchased. Cover-More states that the price is calculated at the time of purchasing your base travel insurance policy.

Canstar’s Head of Research Mitchell Watson said that travellers should check the terms and conditions, as set out in the Product Disclosure Statement (PDS), before buying any insurance product, to see if the policy suits your needs.

“There is no direct exclusion on CFAR on viruses and it is for cancellations ‘because of something not usually covered by the (regular) policy’, so the policy wording would suggest that travellers would be covered up to the amount stated in the policy if they were to cancel their holiday in this period,” he said.

“However, travellers should always read their policy wording to be aware of any exclusions that may exist.”

Cancellation Cover vs Cancel for Any Reason cover: What’s the difference?

Cancellation Cover is different from Cancel For Any Reason (CFAR) cover.

According to Cover-More, “general cancellation cover” is offered as an option on some policies. It only applies to “unforeseeable reasons” leading to the cancellation of your trip. Coronavirus, as it is now considered a “known event”, is no longer covered by this kind of cancellation cover and would not be covered by any policy purchased after 31 January, or even earlier for some destinations.

Examples of an “unforeseeable reason” that typically could be covered by cancellation cover could be an accident that injures you, a sudden illness or a death in the family.

Typically, when you buy your insurance policy, you could be given the option of including Cancellation Cover, which could cost extra. This cover could come in a range of levels, which influences the price of your premium. As a general rule, the higher level of Cancellation Cover you choose, the more expensive the premium. At the same time, you may also be offered the option of Cancel for Any Reason  cover, which “supplements your Cancellation Cover”, according to Cover-More, and is also an added expense.

“Once you’ve chosen your level of cancellation cover, you can add the CFAR add-on to your policy as well,” the insurer states.

“Our CFAR add-on allows you to cancel your travel plans for any reason up to 48 hours prior to your scheduled departure date. When you purchase this add-on for an additional premium, you can cancel your trip for any reason that would normally be excluded by our travel insurance cancellation policies.”

The insurer states that CFAR could provide cover if “you’re concerned about recent events at your travel destination – such as the current coronavirus (COVID-19) outbreak – and want to postpone your trip”.

Other reasons why you may choose to take out CFAR, according to Cover-More, might include:

• you haven’t had your leave approved at work, but want to book your holiday now
• your friend or relative at home is quite frail and you’re worried they might pass away
• you’re starting or looking for a new job and can no longer take your planned trip
• you’ve had an unexpected expense and you can no longer afford to travel right now.

What happens if I have CFAR cover and have to cancel my trip?

Cover-More states that if you have CFAR cover, you first have to cancel your trip “with all the relevant travel providers”. This includes flights, accommodation and any pre-paid tours – anything that’s covered under the policy. Cancellation Cover would typically only cover a percentage of non-refundable costs, depending on the level purchased. CFAR will only cover 75% of what the travel insurance policy’s Cancellation Cover would cover.

Claims have to be lodged to your insurer “at least 48 hours prior to your departure time for cover to apply”.

“For details on how to make a claim, we recommend you read the claim instructions included with your policy documents,” the insurer states.

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More stories about coronavirus: 

• Work in the time of coronavirus: What are your rights if you get sick?
• What does it mean if coronavirus becomes a pandemic?
• Rushing out for hand sanitiser? Read these 5 surprising facts first

As with all our content, Canstar’s Coronavirus coverage will always be free for our readers.