More firms pull the plug on travel insurance due to coronavirus

Aviva and Direct Line have become the latest insurance giants to stop selling travel cover to new customers in response to the coronavirus outbreak.

Holidaymakers who have already booked trips but do not have cover are being left stranded by the insurance industry, as insurers pull the plug on selling cover.

The pair followed in the lead of LV, the Post Office and Admiral, who announced yesterday that they would stop the sale of travel policies to new customers. 

A number of insurers have stopped selling policies to new customers due to the coronavirus

Aviva said it was ‘necessary to make some changes to the travel insurance we can offer our direct customers at this challenging time’ but believed it was a temporary decision. 

Meanwhile, Direct Line revealed that due to the impact of coronavirus, it had experienced a huge increase in demand for travel insurance and felt its priority was to ‘protect and service’ its existing customers. 

Churchill and Direct Line customers were told: ‘For [those] who already hold a travel insurance policy with us there is no change and they can continue to contact us to make a claim or amend their policy.’ 

Aviva confirmed that the changes meant no new customers are able to buy travel insurance from 3pm today but also that existing travel insurance customers booking trips may not be covered on their multi-trip policies for cancellation and abandonment, depending on their destination. 

Both said they would continue to monitor the situation closely.  

LV was the first to stop selling travel insurance on Wednesday night in a move described by one expert as ‘alarming’. 

In a message on its website, LV said it was ‘unable to give’ new customers travel insurance ‘at the moment’, and said it had ‘made the difficult decision to pause the sale of travel insurance to new customers.’

It added it had considered ‘excluding cover or increasing prices for new customers’, but described prioritising customers who had already bought insurance as ‘the right decision’. 

It said in a follow up statement: ‘In the last couple of weeks, we’ve seen the number of policies sold double.

‘Whilst LV is a major motor and home insurer, we are a small travel insurance provider and it’s important for the long-term benefit of all our customers that our exposure to this market remains at a sustainable level for the overall business.’

Existing policyholders will see no change, but it gave no indication as to when it would begin selling travel insurance again, despite describing the move as ‘temporary’.

LV has stopped selling travel insurance to new customers due to the coronavirus outbreak

LV has stopped selling travel insurance to new customers due to the coronavirus outbreak

Which insurers have stopped sales?  

Aviva: As well as not selling travel insurance to any new customers, the insurer has stopped selling travel disruption cover, an add-on which would covers some delayed flights, as well as ‘airspace closure’ which covers people if the airspace they were due to fly from is then closed for 24 hours or more. 

Existing Aviva travel insurance customers who have already purchased travel disruption and airspace closure add-ons are not affected by this decision.  

Post Office Travel Insurance: The Post Office is continuing to sell Travel Insurance policies to new customers.

However, with regards to its Extended Travel Disruption (ERGO Policies), or Natural Catastrophe and Terrorism, Enhanced Trip Disruption (Collinson Policies) it is now advising customers that there is no cover provided for any claims related to COVID-19 for policies purchased after 11 March 2020. 

This was the date when it was confirmed that Covid-19 is a Pandemic by the World Health Organisation.

Customers can still purchase the additional cover, but if they purchase it after 11 March, they are not able to make a claim related to Covid-19. Post Office confirmed it is monitoring the situation very closely and will update its Travel Alerts page with the latest information for policy holders.

Admiral: It said: ‘Like other insurers we’ve made the difficult decision to pause the sale of new travel insurance policies in light of the global impact of coronavirus. 

‘We considered different options, such as excluding cover, for new customers before introducing this temporary measure.

‘We strongly believe that pausing the sale of new policies to focus on our existing customers is the right decision and will keep monitoring the situation. Our existing customers are not affected and annual multi-trip policies can still be renewed.’ 

Some insurers are changing their policies in response to the worldwide coronavirus ourbreak

Some insurers are changing their policies in response to the worldwide coronavirus ourbreak

Zurich: The insurer said it has not made any changes to the cover available under Zurich travel policies. 

It is, however, continuing to closely monitor the situation and will keep the decision to adjust cover and pricing under constant review. 

Direct Line and Churchill: The insurers will not be selling travel insurance to any new customers but will honour existing customers policies. 

Axa: A statement on its website reads: ‘If you purchase a new policy now, it will not cover any trip cancellation or disruption in relation to coronavirus.

‘If you already have an annual multi-trip policy and you book a new trip now, you may not be covered to cancel that trip, or for any disruption you experience.

‘The coronavirus exclusion only applies to cancellation or disruption claims. We will continue to cover medical costs if customers become ill in a country or region the FCO hasn’t advised against visiting.’

Allianz: The insurer said that it will continue to offer travel insurance to UK customers. 

It said: ‘We do not have any intention at this stage to stop selling and continue to closely monitor global updates.’

Customers are advised to check their individual insurance policies moving forward

Customers are advised to check their individual insurance policies moving forward

Alarming restrictions on travel insurance 

A spokesman for the Association of British Insurers said last night that travel insurance remains ‘widely available’.

He said: ‘Insurance is based on assessing the possibility of an event occurring. 

‘Insurers will take account of when any risk becomes more of a probability than a possibility, making whatever commercial decisions that they feel are prudent.’

Gareth Shaw, head of money at consumer group Which?, said: ‘It’s very alarming that LV have withdrawn the sale of travel insurance and that other providers have also started restricting the policies they offer customers.’

‘Anyone planning a holiday should get insurance as soon as they book. If you haven’t already booked insurance and are travelling soon we urge you to get cover immediately from a reputable insurer.

‘The Government, insurers and the travel industry must immediately tackle the huge challenge provided by coronavirus, as the industry depends on people having the confidence that they can travel with the knowledge that they will be covered’.

Earlier in the week, comparison website Go Compare said policy sales had risen 170 per cent since the coronavirus outbreak. 

Brian Brown, Consumer Finance Expert at Defaqto, said: ‘This week alone we have seen Aviva remove their optional cover for cancellation due to Coronavirus, LV= have pulled out of the market, and today Insurance & Go has updated it’s policy to not pay ANY claims related to Coronavirus.

‘This is a fast moving issue, and it’s very likely that over the next few days or weeks we will see other insurers follow suit.

‘Our advice for people travelling this spring/summer is to check their policy NOW to make it covers them for cancellation due to FCO advice, and if they are not covered they should buy insurance from another insurer while they still can.’

Some flights to Italy and parts of China have already been cancelled in the fallout from coronavirus

Some flights to Italy and parts of China have already been cancelled in the fallout from coronavirus

What do people booking travel insurance need?

Earlier this week This is Money looked into what travellers should look for when buying insurance which will cover them if their holiday is hit by coronavirus. 

Insurance will likely only cover you if the Foreign Office has described the country you are going on holiday to as somewhere you should only travel to in an emergency.

If you booked a holiday to somewhere and at the time it was booked the Foreign and Commonwealth Office was not advising against all travel to that country, you should be covered under the insurance you have purchased.

Customers are advised to look at the policy section labelled ‘Cancellation/Curtailment Cover’ or similar.

Brown added: ‘They should look to see if one of the perils insured against is the FCO advising against all, or all but essential, travel to a region.

‘If that isn’t mentioned they should look at the exclusions to cancellation cover to see if the policy won’t pay out in the event the FCO advises against travel.

‘If the policy section makes no mention of the FCO advice either way, it is likely that it will not cover the customer if the FCO advice changes.

‘Sometimes though, insurers, especially those with a brand to protect, will pay claims in these circumstances even if the policy doesn’t strictly cater for this eventuality, for example, this happened a lot with the Icelandic volcanic ash.

‘If they decide to buy a new policy now, they must make sure that it will cover them if the FCO changes its advice and tells people not to travel.’  

Sally Jaques, of GoCompare travel insurance, said: ‘The situation is developing all the time and travellers are advised to compare cover closely to meet the specific challenges presented by the coronavirus outbreak.

‘Buying travel cover shouldn’t just be a box-ticking exercise where the cheapest policy will do.

‘The potential risks are very specific, and you should check you have the relevant cover and that you understand how your policy will work.

‘We are advising people to check their cover levels for Scheduled Airline Failure Insurance in light of the Flybe collapse, as we may see more airlines struggling with the knock-on effect of coronavirus. 

‘SAFI provides cover for your flights if your airline goes into administration and ceases trading, so if your travel insurance includes SAFI, you’ll get your money back for the cost of your flights.’

But it is unlikely anyone who bought travel insurance for a trip to somewhere where coronavirus was a known problem will be covered by that insurance.

You can read more answers to some common questions here.

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