The low-down on getting back in the air

Business travellers are back, filling up the redeye flights.

But what’s changed since you last sipped on a 6:00am airport coffee and are you protected for it?

We’ve all seen those photos across social media this winter. Friends and family escaping to warmer climates, or reuniting with family overseas. It seems that private travel is well and truly back on track! So, it’s no wonder then that New Zealand businesses are also starting to consider returning to the skies. And business travel is not only taking off in NZ, but all over the world, reconnecting industries on a global scale.

As the world continues to re-open up for Kiwis, we turn to travel insurance to help protect us. But like many of the things we thought we knew, travel insurance is not what it was. So what does the cover look like for businesses wanting to travel within New Zealand, or head overseas?

How did insurers first respond to COVID-19?

The COVID-19 pandemic caused a relatively abrupt change to the travel insurance industry, particularly for businesses with corporate travel policies.

Initially, travel insurers became extremely cautious, relying on local Government guidance and advice from the World Health Organisation (WHO). This was unsurprising given that insurers were already paying substantial overseas medical costs due to hospitalisation requirements of people infected with the virus.

In March 2020, insurers responded to the situation with strict COVID-19 exclusions for those still wanting to travel. From an insurance perspective, COVID-19 infection was now deemed a ‘foreseen circumstance’ and insurers introduced timeframes for when cover would be afforded to travellers. Those with trips already booked, would be covered as per the usual terms of the policy wording they signed up for, however, those booking trips after certain cut off dates would no longer be eligible for any insurance cover relating to COVID-19 infection or disruption due to isolation requirements.

At this time, WHO formally declared COVID-19 a pandemic. Shortly afterwards, New Zealand (as well as other countries) issued border closures, travel bans and/or travel warnings prohibiting or restricting travel.

Ongoing changes to travel advice and border restrictions only further complicated matters. But now, 18-24 months later – insurers were finally ready and willing to reduce some of these strict conditions and return to the insurance scene.

How have things changed since 2019?

Travel concerns have relaxed in conjunction with the easing of Government enforced COVID-19 restrictions and Alert Levels. Insurers have returned to providing a certain level of cover for claims relating to this pandemic and the cover availability is there, but there are still coverage considerations to be aware of before planning a return to business travel.

Some insurers favour having a standard pandemics or infectious disease exclusion in their Policy Wording, which excludes any cover related to the virus. They then provide an intricate write back wording, allowing some limited cover for certain kinds of COVID-19-related events. Other insurers prefer to remain silent on the matter in their Policy Wordings, but rather, apply a COVID-19 specific endorsement or exclusion to explicitly outline what circumstances are excluded, and what are included.

It can be difficult to navigate these insurer changes but there are some key themes to look out for no matter which provider you choose.

TIP: Look out for pandemic or infectious disease sections of a Policy Wording and/or review any COVID-19 separate endorsements applied to the cover, which may not be included in the wording itself.

What COVID-19 events are covered?

While there are differences in limits and conditions between policies, almost all insurers have a similar stance on what they deem an ‘unforeseeable event’, which can trigger a claim response, and what they deem a ‘foreseeable event’, which cannot.

This is still open to interpretation and each insurer will differ, but it demonstrates the importance of understanding what COVID-19-related events can and can’t be covered.

Unforeseeable | As it stands currently, most insurers, but not all, will deem a traveller (and/or their travelling companion) contracting COVID-19 prior to, or during their trip as ‘unforeseeable’ and some level of cover can be afforded.

Foreseeable | In contrast, most insurers then deem a ‘foreseeable’ event as travellers (and/or their travelling companion) who do not contract COVID-19 but still have their travel disrupted because of COVID-19 related isolation/quarantine requirements, or border/country closures etc.

Understanding the differences between these is important.

On this basis, it usually means travel cover is only available if a traveller or travelling companion contracts Covid-19 prior to, or during, travel.

Catching COVID-19 – what travel costs can be claimed?  

Corporate Travel Policies will not provide cover for all costs incurred due to catching COVID-19 on your travels. There are still limitations on certain policy sections and looking out for pandemic/infectious disease exclusions and understanding any COVID-19 exclusions is important.

Medical/evacuation costs | Increased awareness of symptoms associated with the less threatening variants transmitted today has allowed for most insurers to continue providing cover for COVID-19 medical related costs.  With many infected people simply able to isolate and recover at home, insurers seem to be more comfortable with quantifying potential medical costs associated with infection.

Although included by most insurers, there may still be variances on the level of cover provided under this section.

Loss of deposits/cancellations | Cancellation costs, change of flight charges, additional accommodation, all these types of costs are included in corporate travel policies as standard, however, for COVID-19-related losses, these are typically excluded.

It could be considered ‘foreseeable’ that travel plans may be disrupted by COVID-19 related circumstances and on that basis, the cover is generally excluded. That being said, some insurers do allow for an inclusion of limited cover whereby some of these costs can be included in a claim, but it isn’t always a given.

These types of costs can be significant, depending on the type, length and quality of the trip being taken. The insurance response for such losses is an important consideration before heading overseas.

Vaccinations | Several vaccine mandates remain in place throughout New Zealand, but this is not necessarily the case worldwide, with an ever-increasing number of countries welcoming all travellers. While New Zealand citizens no longer need to provide proof of vaccination before coming home, some insurers are not prepared to provide cover for the potential medical costs associated with unvaccinated travellers.

Not many insurers take this stance, but there are some that go further to include up-to-date boosters and timeframe requirements in their exclusion. It pays to keep an eye out for these exclusions, if you are travelling without all your jabs, or it has been a while since your last.

There are still plenty of insurers who do not have any vaccination requirements.

Who is now covered?

Corporate travel insurers have reduced the breadth of an insured person definition. Historically, directors and most employees could be covered under a Corporate Travel policy for any type of travel, such as:

  1. Business travel
  2. Business travel with incidental leisure travel included, and
  3. Pure leisure travel

This is no longer the case.

As a result of COVID-19, insurers have become strict on the true intention of the Corporate Travel Policy, which at the heart of it, is intended to only cover business travel.

In most cases, Directors and Executives of a business and their partners/dependent children will continue to benefit from the policy responding to all three types of travel with no changes. However, any other employee or staff member will not; with most policies only covering them purely for business-related travel. Some insurers may provide cover for their incidental leisure travel if it is taken either side of a business trip, but for the most part, leisure travel is excluded for an employee.

This is a significant shift to the definition of an insured person for most corporate travel policies and whilst historically insurers were lenient with the type of travel being taken under their watch, this is now an extremely strict stance and most are unwilling to budge.

There are still options out there. A few insurers are still offering leisure travel cover to employees and others do offer the cover in exchange for increased premiums. It pays to investigate your options if this cover is important to you and your business.

Be prepared, do some research, talk to Long Burroughs.

Travel has changed. There is more paperwork to read, more documents to complete and insurance has definitely got trickier. It’s easy to assume that travel insurance will cover all financial loss incurred by COVID-19, but this isn’t the case.

Be prepared. Arrange travel insurance in advance, well before you or staff members head overseas.

And always do your homework. Understand the conditions of your airline and accommodation bookings so you know the cancellations timeframes and refund/credit policy should your plans change. Find out how the policy you have in place currently responds to COVID-19 losses so you can be prepared, prior to planning any trips.

Ask questions and get advice. We can help you figure out your travel requirements and advise on which policy may be most beneficial for your business.