As the coronavirus outbreak nears its third month and shows few signs of abating before the spring holiday season, insurers and airlines face a growing number of claims as passengers attempt to cancel. But in what circumstances will they pay up, or offer refunds?
I have a trip to China booked in March. Will I get my money back?
Yes. The fact that the Foreign Office has advised against all but essential travel to the whole of mainland China (and all travel to Hubei) makes things easier. Tour operators have cancelled immediate trips – as have most airlines – and have all been offering full refunds.
British Airways has cancelled all its flights to Beijing and Shanghai until 31 March. If you had booked an independent trip, your flight should be refundable. Other big losses should be reclaimable from your travel insurer, assuming you bought cover before this blew up.
Axa, one of the biggest underwriters of travel policies in the UK said: “We always follow Foreign Office advice. So if you’re scheduled to travel to a region or a country the FCO has asked people to avoid, our policies will kick in,” says a spokeswoman.
Generally, insurers will only pay out provided you bought the cover before the virus hit the headlines and became a “known” factor.
What about Hong Kong?
The fact that Foreign Office is not advising against travel to Hong Kong makes things more complicated. The good news is that plenty of airlines are offering passengers with flight bookings to the city the chance to cancel or to move the flight date to later in the year.
British Airways has been offering those with Hong Kong flights up until 1 April the chance to rebook on to another flight, or request a refund. Cathay Pacific this week said it had been forced to cancel 40% of flights for February and March. However, insurers are under no obligation to pay claims for significant expenses if you could get there, but chose not to travel.
I’m due to tour China in May. What should I do?
The advice is to wait and see. The Foreign Office is constantly reviewing its advice, and in the face of the continued outbreak the no-travel ban advice would likely remain, meaning operators would have to cancel trips and refund. Insurers would have to follow suit. However, once the effective travel ban was lifted, insurers would no longer have to pay up if you decided not to travel – unless your GP advised against it.
I am supposed to be taking my elderly parents to an affected area soon, but we don’t want to risk it. Will our insurance cover it?
Technically not, unless the Foreign Office changes its advice and advises against travel to your chosen destination. Aside from Hong Kong, South Korea, Singapore, Japan, and Indonesia will be regarded by many as higher risk areas. Thailand saw a lot of Chinese visitors over the Lunar new year celebrations, but British tourists who decide they no longer with to travel are not entitled to refunds.
The big exception is if your GP has advised you or any of your party not to travel to a virus area, in which case your travel insurance should then kick in.
Axa told Money: “If your GP tells you not to travel to a nearby area (not China), you should contact us before your departure date, and you won’t be penalised.”
However, it noted that the normal conditions of declaring pre-existing conditions will apply. So, if you were told not to travel by your doctor because of an underlying lung problem that you had not declared to your insurer when you bought the policy, you may find your claim turned down, or the payout reduced.
That said, and given that the virus disproportionately affects the elderly, most doctors would probably recommend not travelling to a virus-affected area, with or without any previous medical conditions. In such cases it may be hard for an insurer to turn down a claim, although you can bet that some will try.
It would be a similar story if the government lifts its travel-ban advice but the airline continues not offering flights.
And it would be hard for an insurer to turn down a claim for other losses, if you could not get to your destination.
If I ignore any government advice against all but essential travel, will my travel insurance still cover me?
The Association of British Insurers is clear. If you travel against government advice then you will most likely find that this invalidates your travel insurance. If unsure, speak to your travel insurer, it says.
I am due to travel to Asia in June, but am yet to buy the flights. Can I limit my exposure to the virus?
There has never been a cheaper time to book flights to east Asia but it is risky, given the possibility of events moving out of control. The advice is to buy tickets from an airline that offers flexible fares, or the chance to rebook at a later time. British Airways, for example, will let buyers change their flight booking for £150 per person plus any additional fare costs.
Nearly all basic economy flights will not be refunded on cancellations, but you can choose to pay more for a “semi flexible” or “flexible” ticket, although the costs mount up. For example, Turkish Airlines was this week quoting a non-refundable economy fare of £240 to fly one way from London to Hong Kong (via Istanbul) on 7 March. The semi-flexible fare, which allows a fee-free date change, costs £404. The fully refundable fare costs £595. A canny buyer could opt for the latter, cancelling it in the event of a significant development of the virus. If the virus is successfully tackled, you could cancel the expensive flight, take the refund, and rebook a cheaper flight if available.
Most of the big chains in Hong Kong are offering fully cancellable rooms this week, in an attempt to get some bookings. No sane person is making non-refundable hotel bookings in Asia right now.
Has there ever been a cheaper time to visit Asia?
At least nine out of 10 hotel rooms in Hong Kong are currently unoccupied, according to a South China Morning Post report this week, which said the hotel industry is in a “life or death” struggle to survive. Last February there were up to 200,000 tourist arrivals every day in Hong Kong, but this has slowed to just 3,000. Many hotels have chosen to shut down temporarily instead. The impact is being felt in Da Nang in Vietnam, Bali in Indonesia and Siem Reap (Angkor Wat) in Cambodia. Four star hotels in Siem Reap are currently offering rooms starting at £8 a night, while five star hotels are as low as £20 a night. But the super-luxe hotels in Hong Kong are clinging on to their rates; the Mandarin is charging £400 a night.
Or book a cruise?
For the cruise industry, the coronavirus has been a public-relations nightmare. The world has watched as the Diamond Princess liner has been quarantined in the Japanese port of Yokohama, its 3,600 passengers and crew stuck and the number of people infected by the coronavirus climbing to over 600. This week two passengers died.
If you are made of strong stuff, you will practically be able to name your price on taking a cruise this summer. This week the Norwegian Cruise Line was advertising its “biggest sale of the decade” with at least 30% off. Expect prices to fall even further.
