A lack of clarity from travel insurers over how much protection their policies offer for Covid-related disruption could lead to consumers losing money as international travel reopens, Which? research has found.
New research from the consumer champion suggests that many travel insurance customers are being left with a false impression about the level of protection they would benefit from if the pandemic was to impact on their holiday plans.
Which? believes some of this is down to poor communication by some travel insurance providers and the use of often confusing, blanket terms such as ‘Covid Cover’ or ‘Enhanced Covid Cover’ on insurers’ websites.
The consumer champion’s survey of over 2,800 travel insurance customers, conducted between February and March 2021, found that three in 10 respondents (29%) had committed to bookings or arrangements for international trips this year – with around one in 10 (12%) saying that while they’d not booked or arranged travel, they did have specific plans.
Which? asked the survey respondents if they believed that their policies would cover them in the following six scenarios:
- Cover for costs if – after booking my trip – the Foreign, Commonwealth and Development Office (FCDO) advises against travel to my destination;
- Cover in the event that a local or national lockdown prevents me from travelling;
- Cover in the event I can’t travel because I have to self-isolate at home because of NHS Test and Trace;
- Cover in the event I can’t go on my trip because I’m diagnosed/test positive with COVID-19;
- Medical cover if I catch COVID-19 overseas; and
- Cover if my airline or holiday company postpones my travel but will only offer a rebooking or credit and not a cash refund.
Half of survey respondents (50%) believed that they’d be covered should the government’s travel advice change after a trip was booked, and nearly half (47%) thought their policy would cover them in the event that local or national lockdowns prevented them from travelling. Almost half (46%) believed their policy would cover them if their airline or holiday company postponed their travel, but wouldn’t offer a cash refund.
However, when Which? analysed 73 travel insurance providers between October and November 2020, cover for those three such eventualities – particularly for when government travel advice changes – was very rare, with large discrepancies between what policies included. The consumer champion has been continuing actively to monitor Covid-related cover offered and believes little has changed to improve this situation in recent months.
Since March 2020, most insurers have considered the pandemic a ‘known event’, and excluded FCDO cancellation cover from new policies and for newly booked trips. However, Which?’s survey found that customers with policies bought after March 2020 were more likely to believe that they were covered for this type of disruption than ones that had bought policies before then.
For instance, two thirds (65%) of respondents that had bought travel insurance less than six months prior to participating in the survey believed that they would be covered if FCDO travel advice changed and advised against travel after they had booked their trip, whereas less than half (48%) of respondents that bought policies over a year ago did.
While some insurers give upfront information about how extensively they protect against Covid-related disruption on their webpages and in their FAQs, some providers only state key benefits that their ‘Enhanced Covid Cover’ provides, and are less clear about what is excluded.
Other providers describe their policies as covering a ‘range’ of Covid-related scenarios, and direct prospective customers to the FAQs for further detail.
Which? submitted evidence to the Department for Transport (DfT) ahead of today’s publication of the Covid Passenger Charter calling for travel insurance providers to be clear about Covid-cover terminology.
Which? believes providers should present what is included and excluded in their Covid policies clearly on their websites, and not bury exclusions in their FAQs. The Financial Conduct Authority (FCA) should be monitoring terminology used by travel insurers in their Covid-19 policies and marketing material to ensure they provide sufficient clarity.
The FCA should also issue guidance to providers on the use of blanket terms such as ‘Covid Cover’ and ‘Enhanced Covid Cover’, which often overlook what kind of cover is not included – without qualifying them clearly. Doing so would help consumers to make a much more informed choice when booking a trip abroad, and could save them money.
Which? is also urging the DfT to work closely with the Treasury and sector regulators including the FCA, Civil Aviation Authority and Competition and Markets Authority, as well as with industry, to ensure all travellers adequately understand their travel insurance cover and can access cover that protects them against FCDO advice related to the pandemic when international travel restarts.
Jenny Ross, Which? Money Editor, said: “The ongoing threat of Covid-related disruption means that getting the right travel insurance for your holiday is more important than ever.
“Without closer scrutiny from government and regulators of how clearly insurers present their policies, there is a very real chance that many travellers will be left out of pocket yet again this summer.”
Which? advice for consumers before booking travel insurance
– When looking online for travel insurance policies, consumers should be wary of the variation between the amount of information insurers give on their websites about their core levels of cover, especially when it comes to how covered you are in scenarios related to the pandemic.
– Terms such as ‘Covid cover’ or ‘Enhanced Covid cover’ mean different things for different insurers, so consumers should avoid making assumptions. Extra caution should be taken if information provided only lists the benefits of the policy, but does not describe what is not included.
– Some protections will only apply to customers that insured their trip before the pandemic was declared last year.
– The best way to find out about what a policy offers is to spend some time reading the policy document – in particular check the medical expenses, cancellation and the policy’s general conditions and exclusions. If there are protections that you want from your travel insurance, but you find the policy document confusing, contact the insurer directly to confirm before booking.
– A quicker way to check key areas of your policy’s cover is to consult the Insurance Product Information Document, which is designed to provide information on key areas of cover and exclusions, although it will not tell you everything about the policy – so be sure to check with the insurer if you have any concerns.
– Anyone who is booking a holiday should look for a flexible booking policy that covers them against countries changing from green to amber or red between booking and travel.
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