Insurance News

Travellers warned over Covid cancellation insurance claims

British travellers have been warned they will not be able to claim insurance on holidays cancelled because of Covid travel restrictions.

Insurers said they will not cover travel disruption or cancellation on trips bought after the pandemic was officially declared as it is regarded as a “known risk”.

The warning came as the Government prepares to announce further travel bans and restrictions this week, in an attempt to limit the risk of new variants of the virus entering Britain.

The moves are likely to throw into doubt the holiday plans of millions over the coming months.

They could also leave thousands of UK nationals who live abroad unable to return to Britain and many others with relatives overseas unable to visit them.

A spokesman for the Association of British Insurers told The Telegraph: “Customers should check their policy as it is likely that any policy bought or renewed, or trip booked, after the pandemic was officially declared is unlikely to cover cancellation due to coronavirus as it is a known risk.

“It also remains the case that travelling against FCO advice will likely risk invalidating your policy so it’s essential to check guidance before travelling.”

In the event of an outright travel ban, some industry chiefs have predicted tour operators and airlines, rather than insurers, will bear the brunt of refund claims from customers with nowhere to go.

Holidaymakers will be hoping that any new restrictions on travel imposed by the UK Government will start to be lifted later this year.

Indeed the majority of Britons intending to travel abroad have booked their holidays for “much later on in the year” – between late summer and October – according to the travel industry.

A spokesman for the Association of British Travel Agents (ABTA) said: “The number of people who have booked holidays is pretty low. And the people who have booked forward – and again the numbers are lower than what we usually see – they’ve booked holidays for much later in the year.

“The restrictions we have now are not necessarily relevant to when we get to an improved situation later in the year. But for now, people might have the impression there are tens of thousands going on holiday, and that is simply not the case.”

Most people currently leaving or arriving in Britain are doing so either for business travel, or on their return from seeing family and friends over Christmas, the trade body added.

“The Foreign Office is advising against travel to many, many countries throughout the world and the travel industry follows that advice,” said ABTA.

Any ban on travelling in and out of Britain would have a significant impact on millions of Britons with connections overseas.

There are an estimated 970,000 individuals who own property overseas, such as time-shares and holiday homes and in 2019 alone 23.43 million trips were made by Britons to visit friends or relatives abroad, according to the market data company Statista.

On top of that there are an estimated several million UK nationals living around the world, with 994,000 just in EU countries.

As of last Monday all travel corridors the UK had with other countries are now closed. These had previously allowed travellers arriving from countries where the coronavirus risk was judged to be low to avoid self-isolating when they entered the UK. 

Britain’s travel insurers were inundated with a record number of claims after the start of the coronavirus outbreak disrupted hundreds of thousands of holiday plans last year.

Payouts were expected to reach £275m, a record figure, as travellers sought reimbursement for cancellations due to the imposition of travel restrictions around the world as countries went into lock down. 

It represents the largest number of claims and payouts made for any single event, dwarfing the £62m made in payouts related to the volcanic ash cloud in Iceland in 2010, which formerly held the record.

“Travel insurers are committed to supporting their customers and expect to pay out a record £275 million to people who have had to cancel holidays or faced disruption when travelling abroad,” said the ABI spokesman.

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