Let’s find out more about COVID-19 insurance types
WHO has made great progress in raising awareness about COVID-19 safety measures. Hundreds of scientists are also working on the vaccine prototypes to protect humanity against the pandemic. However, our health is not the only life aspect suffering from the novel coronavirus. People are losing jobs and businesses, having their travel plans ruined, can’t leave their homes for weeks, and face many more challenges. Thankfully, some of them can be aided too, with the help of insurance.
We must admit that, as a rule, standard insurance policies don’t provide protection from the epidemic or pandemic risks. If they did, insurance companies would likely face too many claims. That would lead to a significant rise in policy prices, probably, making them unaffordable.
Nevertheless, COVID-19 has made some amendments to existing practices. Currently, almost all the travel insurance policies on the market are likely to cover claims related to COVID-19 for emergency medical and repatriation costs. And yet, not many companies actually protect travelers from other aspects of getting a positive COVID-19 test. Non-medical issues, such as flight or hotel cancellations, are likely to be left unattended. Unlucky tourists can usually request a refund or postpone their trip directly with the airline, hotel, or tour operator.
However, a bunch of major insurers is trying to provide more or less comprehensive protection in case of COVID-19 related trip cancellations. AXA, Nationwide, AllClear, Allianz Assistance, Abta, Asda, Co-op, Staysure, Trailfinders, Insurefor, Jet2, Leisure Guard, MRL Insurance, Saga, Big Blue Cover, etc – these are just some examples. Selected specialist providers such as Battleface and Wild Frontiers are also offering insurance to “no-go” destinations that are not on your country’s approved list during COVID-19.
At the same time, you should be very careful when choosing a policy as there are some crucial nuances. For instance, you may be covered if you need to cancel because you’ve caught coronavirus, but not if someone else in your household gets it and you’re self-isolating without being infected.
Rare insurers will cover you if the government changes its advice after you book because of a pandemic worsening. Also very few will pay out your claim if your destination country restricts crossing its borders after your trip has been arranged.
When it comes to “unapproved” destinations, travelers of all sorts can face difficulties in finding the right protection type. Whereas some insurers will cover incidents non-related to сoronavirus (such as injuries, luggage loss, etc), others may refuse to provide any insurance to such destinations. It’s very unlikely at this time that you’ll get covered in the case of COVID-19 when you travel against governmental advice.
Hence, even if your chosen policy is said to “cover COVID-19 related issues”, make sure to read the fine print and all the policy conditions.
Businesses have suffered a lot during the lockdowns, with the majority of non-essential retailers still not operating at their fullest potential. Sadly, business interruption insurance policies typically don’t cover the cases of epidemics.
Only a small number of businesses have chosen to buy any form of cover that includes business interruption due to a notifiable or infectious disease. An even smaller number of customers will have coverage for unspecified diseases. Those rare policies potentially enable the insured businesses to claim for the impact of the COVID-19 pandemic. Yet, they are likely to consider only those cases where the illness has directly affected one of the employees so that the premises are forced to be closed for disinfection. Moreover, it is necessary to consider the precise wording of the policy; some BI policies specifically exclude damage to property caused by contamination.
However, some “pure” non-damage business interruption policies will cover losses caused by a forced business closedown disregarding the reasons. Whether a BI policy will be triggered by the COVID-19 pandemic will depend on whether the business interruption has been caused by the pandemic or the voluntary steps taken in response to the pandemic.
At the same time, employees infected by a virus while at work may file workers’ injury claims to cover loss of income or medical expenses. Generally, workers’ compensation does not cover routine community-spread illnesses like a cold or the flu, because they usually cannot be directly tied to the workplace. However, workers deemed essential including health-care workers, mass-transit operators and grocery-store workers are at a high risk of exposure to the virus while at work, so they may give it a try.
According to Dorsey&Whitney LLP, insurance companies in the UK have been resistant to claims under BI policies for COVID-19 losses. A few insured enterprises have appointed lawyers to pursue legal action. This led the Financial Conduct Authority (“FCA”) to announce on 1 May 2020 that it intended to seek a judicial declaration to resolve policy wording uncertainty in relation to business interruption claims.
By contrast, some US states are expected to introduce legislation that will require insurers to pay out under BI policies irrespective of any exclusions. Each of these bills has been referred to the appropriate legislative committee and is awaiting action. These initiatives generally seek to compel insurers to provide coverage for the business interruption insurance their policyholders have purchased and forbid insurers from arguing that coverage is precluded by virus exclusions or by “physical damage” to property requirements.
For instance, Congressman Mike Thompson (D-CA) recently introduced H.R. 7412, the Business Interruption Relief Act of 2020. The bill proposes “creating a voluntary program that will reimburse insurers who voluntarily pay out business interruption claims.” Under the program, “insurers can choose to pay out claims to these businesses and be reimbursed by the federal government.”
If similar bills are passed in other states and countries, receiving some money under business interruption claims will be easier.
Life & health
In the US, health insurance providers have united efforts and taken action to remove cost and bureaucracy barriers to healthcare and diagnosing COVID-19. To begin with, they have waived the prior authorization process and eliminated patient cost-sharing for those suspected or confirmed with COVID-19. Though, when insurers agreed in March to cover all Coronavirus-associated costs, most considered the deal to be temporary. Some companies have extended their initial expiration dates. Nevertheless, citizens wishing to get full COVID-19 coverage should make sure their chosen insurer has its waiver extended.
Health insurance providers also expanded their telehealth offerings and developed a series of more affordable premium solutions for employers and employees.
In Europe, insurers have different scopes of COVID-19 coverage. The generally accepted European Health Insurance Card (EHIC) covers both COVID-19 testing and treatment at public hospitals in case of infection. These benefits are available to all European Union citizens possessing an EHIC, who currently stay in their home country or another EU country. For Brits, it will continue to be valid in the EU until the end of the Brexit transition period (31 December 2020).
However, EHIC has a few limitations. It does not cover repatriation in case of death from COVID-19 or any other reason. Neither is it valid in non-EU countries. If you’re visiting a country where citizens pay for healthcare, you will also need to fund the medical costs. EHIC won’t cover medical costs from private healthcare providers, and it also isn’t valid on cruises. For third-country nationals residing in EEA countries, coronavirus testing and treatment depends on the policy of the insurance provider.
In China, some insurers have extended coverage on existing health policies to cover treatment costs or provide Covid19-specific death cover. Other health insurers have initiated ‘Emergency Response Plans’ to ensure fast claim settlement for policyholders. Additional coverage has also been provided to millions of healthcare workers and reporters working in the worst-affected areas.
As for the income protection policies, they typically cover short- and long-term absence from work due to ill health or injury and have a waiting period before the money is paid out. If you get sick with coronavirus you may be covered under income protection, but only if you’re off work for a longer period of time than what your annual leave allows. Such policies are unlikely to cover people self-isolating as they probably won’t be off work longer than the waiting period and may not be too ill to work.
The commercial insurance sector has a few policy types potentially triggered by COVID-19:
- trade and credit policies, under which insurers pay up when the holder’s customer doesn’t because of events such as bankruptcy. Trade credit policies do not typically exclude cover for pandemics and the extent to which the impact of COVID-19 could be considered claimable under the given insurance will depend on the policy wording;
- bond insurance guarantees, which repay bondholders’ principal and interest payments in the event of default. Earlier this year, the US credit rating agency, Kroll Bond Rating Agency (KBRA), recorded that bond insurance penetration spiked sharply up to 7% in the first half of 2020, a level which has not been seen since the global financial crisis;
- surety policies, which take effect if a party fails to fulfill an obligation, such as a construction project;
- event cancellation claims.