As a result of the coronavirus outbreak, travelers have become more interested in travel insurance than ever. But with this pandemic, most regular travel insurance won’t help you, because no policy will cover changes or cancellations due to fear of an epidemic (though some will reimburse you if you have to cancel because you have been diagnosed with Covid-19 or are quarantined). The only way to be protected in the event that you choose to cancel a trip due to concerns about the coronavirus is to purchase additional “Cancel For Any Reason” (CFAR) coverage. As the name implies, CFAR allows you to cancel your trip without requiring that you justify your reasoning. It may give you the peace of mind you need to book a trip—but there are caveats. Here are the main points travelers need to know about buying and using CFAR insurance.
Cancel For Any Reason coverage is expensive.
Pre-pandemic, CFAR coverage typically added 40% to your insurance premium—but as both interest in and claims against CFAR policies have increased, so has their price. We looked at five insurance quotes in August and found that a CFAR clause increased the premiums on four of those products by 50% to 76%. To put this in dollar figures: Standard travel insurance for trip cancellation/interruption and medical expenses on a $20,000 safari may cost $1,000; adding CFAR could bump that up to about $1,750.
Don’t expect to get all your money back.
Specifics vary by policy and based on your state of residence, but most plans reimburse 75% of your nonrefundable, prepaid trip costs. Some have a maximum amount that you can insure (e.g., $10,000 per person).
You can’t add CFAR at the last minute.
To be eligible for CFAR coverage, you must purchase it soon after you make your first trip payment, usually within 14 to 21 days.
You can’t cancel at the last minute, either.
You’re out of luck if you find out a day before your trip that you must cancel—say, because the Covid test that was required for you to enter your destination country came back positive. In order to be reimbursed via a CFAR clause, you must call off your trip at least 48 hours prior to departure.
Coronavirus is impacting the availability of CFAR coverage.
CFAR policies had previously been unavailable to residents of New York State due to state insurance regulations; on March 6, in light of concerns about coronavirus, New York’s governor announced that travel insurance companies could sell CFAR policies in the state. However, several providers have discontinued offering CFAR coverage entirely. Given the huge increase in demand for this coverage—and the increase in associated claims filed—we expect that other providers may change the terms of their CFAR offerings in the near future.
Is it right for you?
We are hearing from some readers who want to book trips but don’t want to risk losing 100% of their prepayment, should they decide to cancel because of changes in Covid case rates or protocols at their destination. Those readers have been happy to learn about CFAR. So from what we are seeing, CFAR is an option that can provide some peace of mind, at a price. Whether it’s enough peace is a personal choice.
Which insurance company should I choose?
There are many providers, and in our article How to Buy Travel Insurance: What It Covers, When You Need It, you can learn more about what to look for, what to avoid, and how to choose the right one for your specific needs.
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