Will future pandemics be covered by travel insurance? Experts say yes

Even if you never thought much about travel insurance or trip protection in the past, these policies may be top of mind now. After all, the coronavirus pandemic has forced all of us to read the fine print on our credit card trip protection benefits, as well as travel cancellation and rebooking policies.

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According to Google Trends, there's been a meteoric rise in travel insurance search queries online, which peaked the week of March 8. Many of these searchers are likely feeling motivated to buy travel insurance policies for future trips.

The number of travel insurance policies sold has skyrocketed 200% since January, InsureMyTrip told TPG earlier this month. That's the highest increase the company has reported in 20 years.

"Whenever a major event happens, people start to understand the value of travel insurance," said Cheryl Golden, the director of marketing, e-commerce and strategic planning for InsureMyTrip.

For Squaremouth, a travel insurance comparison portal, future travel insurance policy purchases haven't spiked just yet, as many travelers are still hesitant to book new trips.

"We are seeing travelers who had trips canceled because of the pandemic ... [reschedule] their trips typically around 12 months out from their original trip dates, while others are waiting until the situation has resolved before rebooking their trip," said Kasara Barto, public relations manager at Squaremouth.

But, like InsureMyTrip, Squaremouth said that "every major event that impacts travel has an effect on the travel insurance industry," and the COVID-19 pandemic "has caused people to be more aware of travel insurance in general."

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Changing travel insurance needs

When the worst of the coronavirus pandemic has passed, we'll all venture out into the world again.

Travelers may, at least at first, stay closer to home. Domestic destinations and national parks reached by car may be more appealing in the weeks and months immediately following the pandemic. This alone could have an effect on the way we buy travel insurance. Travelers may look for policies that specifically include cancellation coverage, Barto said, as regular health insurance already covers travelers throughout the U.S.

"For [our] proprietary products, we are working to create new policies focused on domestic travel specifically, that will include cancellation coverage and offer low medical benefits," she explained.

But as travelers regain confidence and the pandemic appears even smaller in the rearview mirror, travelers may require the opposite.

Most major airlines, cruise lines, hotel brands and other travel providers have responded to the pandemic by offering unprecedented cancellation and rebooking policies. Though most of these are temporary, it does mean that, for certain types of trips, popular trip insurance policies with cancellation protection may not be as relevant. If the airlines and cruise lines keep these policies in effect for a year or more, travelers could start shopping for a very different set of protections.

"Many travelers buy travel insurance specifically for cancellation coverage," Barto said. "However, that is only one of many benefits available." Barto explained that, if a traveler is able to get compensation from, say, their airline or hotel, they may not need to seek that kind of protection from a travel insurance provider. But that doesn't mean they'll want to forgo travel insurance altogether.

Travelers may seek out policies that are focused instead on health benefits, such as emergency medical evacuation coverage, Barto added. They may also be interested in travel delay protections — though many of these benefits may already be available through a premium credit card in your wallet.

There are a number of premium credit cards, including a handful from Chase, that offer trip cancellation and interruption insurance, as well as coverage for baggage delays or lost and damaged baggage; trip delay reimbursement; and even medical evacuation benefits and travel accident insurance, among other safeguards for your travels.

But, as with independent travel insurance, you're only eligible for reimbursement if certain events lead to the cancellation or interruption of your travel arrangements. And right now, a pandemic isn't one of them.

We reached out to a Chase spokesperson who said there were no changes to report at this time. But independent travel insurance providers will almost certainly respond to the situation by introducing policy changes.

Related: The best travel insurance policies and providers

Filling gaps in travel insurance coverage

It's too soon to say whether or not premium credit cards will modify the terms and conditions of their trip cancellation and interruption policies. But experts seem confident that independent travel insurance companies will respond to the coronavirus crisis by adding new covered situations to their fine print.

"[Squaremouth] believes this current situation will drastically impact travel insurance, in that providers will include coverage for virus outbreaks on future policies, similar to the Sept. 11 attack leading to the addition of the terrorism benefit," Barto said.

Before Sept. 11, travel insurers didn't offer coverage for terrorism attacks. But the "the outpouring of traveler concern," Barto explained, caused many providers to include this with their standard coverage.

InsureMyTrip's Cheryl Golden also pointed to Sept. 11 as a major event that changed travel insurance — but there have been others. Cancel for any reason insurance (sometimes called CFAR) emerged from the financial crisis of 2008, and the volcanic eruption in Iceland in 2010 led travel insurance companies to rethink natural disaster coverage.

Related: US airline execs warn coronavirus impact 'could be worse than 9/11' downturn

"We know several companies [are] now looking at including Centers for Disease Control and Prevention (CDC) and State Department warnings," Golden told TPG. "If these warnings are added to more policies, travelers would then use them as covered reasons for cancellations or interruptions during a pandemic [or] epidemic when filing a claim."

Since "viral outbreaks and pandemics will be a top concern for customers," Barto said, Squaremouth expects more travel insurance providers to add virus-related benefits to future policies. "This could include a broad scope of coverage for travel impacted as a result of a viral outbreak and could possibly include cancellation coverage if a traveler contracts a virus, if CDC alerts are issued for a destination or if travel bans are issued."

How quickly these changes could come into effect is more difficult to predict. "When it comes to policy changes," Golden said, "they can sometimes be done immediately. Other times, it may be a three- to six-month process." After Sept. 11, those changes were immediate — but creating an entirely new type of coverage, such as CFAR, could be a much longer process.

Bottom line

Golden said that, because there are still so many uncertainties, travelers should still consider cancel for any reason insurance.

This type of comprehensive plan will typically cost 40% more than your standard insurance policy. But you'll be able to back out for any reason, whether there's a pandemic sweeping the planet, an economic recession, some unpredictable future event or you've simply changed your mind about traveling.

"We were pleased to see that the vast majority of travel insurance companies have committed to continuing to offer CFAR during this pandemic," Golden added. "That's a good sign about the health of the travel insurance industry. While a few companies have reduced reimbursement percentages, this coverage remains widely available to those who meet the eligibility requirements."

And for travelers who are concerned about how future health crises could affect their travels, there may be a whole new way to protect trips from disaster. Past events and expert insights both suggest travel insurance is on the verge of a new evolution.