How has Covid impacted the cost of travel insurance during 2020?

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There is no question that 2020 has been a write-off in many people’s eyes due to the covid pandemic that has been affecting everyone all around the world. One of the worst affected industries during this time was insurance, specifically travel insurance. Travel insurance is one of the most common insurance premiums you can expect to take out when visiting countries abroad and even within the UK. During the Covid pandemic in 2020, several major insurance providers closed their doors to travel insurance altogether, making it a rare sight in today’s world, and a more expensive one.

How has covid affected travel insurance price?

Covid saw the closure of borders, ports (both land and air), and even full country lockdowns put into place, preventing anyone from going outside the borders of the country. Here in the UK, during 2020 three lockdowns saw airports closed for everything but essential travel whilst ports and borders were closed unless it was deemed a requirement.

Covid has put a stop to vacation-based travel all together which is one of the main reason’s consumers buy travel insurance. With this, 31 of the 71 large insurance providers, including the likes of the Post Office, Aviva and Direct Line all stopped their premiums for travel insurance. Although unconfirmed, we can only assume that these major companies would rather focus on their existing services and customers than travel insurance that would not gain any new customers for the next few months or even years.

Travel insurance premiums have always been relatively affordable when you consider the complete budget for your holiday or business trip, however during the pandemic saw travel insurance prices rise almost immediately, as no one was able to travel. Many major newspapers and even insurance companies themselves had suggested buying an annual cover for travel was advised to avoid this price boom.

What does Travel Insurance cover when Covid is around?

For the most part, travel insurance as a whole hasn’t changed too much. Your cover will likely still be the same depending on the premium you pay for. With this being said, there may have been some small print changes to any documents you may have seen or will see going forward.

In most cases, if you purchase travel insurance and travel to a destination that the FCDO (Foreign, Commonwealth & Development Office) is advising against you visiting, then your cover may be void. It’s always best to check the small print if you already have an existing premium with your insurance provider.

Whilst coronavirus is still a major pandemic around the world, your cover should at least cover the following attributes;

  • Medical expenses and cover for bringing you home if you’re ill (this will likely include Covidbut void if FCDO disapproved)
  • Personal Injury Cover whilst abroad
  • Cover for lost or damaged items
  • Cover for cancellations or missed departures (air / land / sea)
  • Cover for missing or delayed baggage.

Depending on the type of cover you get, it’s strongly advised you check all your features included with your cover as you don’t want to be caught out when you’re abroad. If you’ve booked a holiday before the pandemic had occurred and this has been cancelled, your insurance provider should also refund you, and remain covered. If not, speaking to your insurer and or the Association of British Insurers will aim to protect you as a customer.

The consumer who wants to travel

What does this mean for you, as a consumer?

Your first thought may reside within the value of travel insurance and the prices rising. Because of major insurance companies pulling out their travel insurance policies, and the unpredictability of the covid pandemic it’s still difficult to assess if the prices of travel insurance will rise, or fall, following a covid-free world.

Because of many major insurance providers closing their doors to travel insurance, you may find it harder and maybe more expensive to purchase travel insurance, but we don’t think this will be forever. Going forward, these companies will likely re-open their services and allow for travel insurance to be purchased, ready for the inevitable boom of travel around the world.

You may already be looking for new travel insurance plans ready for your next getaway when the country is out of lockdown; however, you may stumble across “overly-affordable” plans that you may want to stay away from. Although the prices of travel insurance are likely to fluctuate, the cheapest plans may not be ideal or reliable if you were to fall ill or attempt to make a claim whilst on your trip away.

What will the future hold around covid and travel insurance?

At the moment, it’s very difficult to predict both the travel and insurance industries and how they’ll recover from the covid pandemic. Now that many countries around the world are deploying vaccines in the billions, travel will slowly become more affordable and will be a lot more frequent for the first few years, post-covid.

With this being said, there is a good chance that travel insurance prices may fluctuate from the day the planes open their doors for holidays until the travel boom slows down. These prices will likely cover all the major features, including covid-related illnesses which will be sure to keep you safe regardless of where you visit.

Late 2021, going into 2022 will likely be a more positive and holiday-friendly year allowing you to visit your favourite places or just get some well-deserved rest in the hot sun. Travel insurance prices may rise but will likely fall again within a matter of months if the conditions remain normal. We can’t be too sure what the future holds, but we know that without Covid, it will be much better.

Conclusion

When you consider all of the above, the next few months or maybe even years will be crucial for the travel industry, as well as the insurance industry. If the covid-pandemic can be moved aside and allow for people to travel freely, then we can be sure that travel insurance will come back and may even be cheaper than before. Regardless of this, if you are planning to go away anytime soon, you may want to consider looking into travel insurance sooner rather than later to avoid any last-minute budgeting issues. Do let us know about your travel insurance stories and dilemmas in the comments!

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