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Call for clarity over Covid travel insurance cover

Consumers could end up losing money due to a lack of clarity from travel insurers over how much protection their policies offer for Covid-related disruption.

The assertion came in research by consumer group Which? as international travel reopens today (Monday).

The study of more than 2,800 people suggests that many travel insurance customers are being left with a false impression about the level of protection they would benefit from if the pandemic was to impact on their holiday plans.

Which? believes some of this is down to poor communication by some travel insurance providers and the use of often confusing, blanket terms such as ‘Covid Cover’ or ‘Enhanced Covid Cover’ on their websites.

The poll found that three in 10 respondents (29%) had committed to bookings or arrangements for overseas trips this year – with around one in 10 (12%) saying that while they had not booked or arranged travel, they did have specific plans.

Which? asked the survey respondents if they believed that their policies would cover them in the following six scenarios:

  • Cover for costs if – after booking my trip – the Foreign, Commonwealth and Development Office (FCDO) advises against travel to my destination;
  • Cover in the event that a local or national lockdown prevents me from travelling;
  • Cover in the event I can’t travel because I have to self-isolate at home because of NHS Test and Trace;
  • Cover in the event I can’t go on my trip because I’m diagnosed/test positive with COVID-19;
  • Medical cover if I catch COVID-19 overseas; and
  • Cover if my airline or holiday company postpones my travel but will only offer a rebooking or credit and not a cash refund.

Half of survey respondents (50%) believed that they would be covered should the government’s travel advice change after a trip was booked, and nearly half (47%) thought their policy would cover them in the event that local or national lockdowns prevented them from travelling.

Almost half (46%) believed their policy would cover them if their airline or holiday company postponed their travel, but wouldn’t offer a cash refund.

However, when Which? analysed 73 travel insurance providers between October and November 2020, cover for those three such eventualities – particularly for when government travel advice changes – was rare, with large discrepancies between what policies included.

Which? believes little has changed to improve this situation in recent months.

The organisation submitted evidence to the Department for Transport  ahead of today’s publication of the Covid Passenger Charter calling for travel insurance providers to be clear about Covid-cover terminology.

It believes providers should present what is included and excluded in their Covid policies clearly on their websites, and not bury exclusions in their FAQs.

The Financial Conduct Authority should be monitoring terminology used by travel insurers in their Covid-19 policies and marketing material to ensure they provide sufficient clarity, according to Which?.

The FCA should also issue guidance to providers on the use of blanket terms such as ‘Covid Cover’ and ‘Enhanced Covid Cover’, which often overlook what kind of cover is not included – without qualifying them clearly. Doing so would help consumers to make a much more informed choice when booking a trip abroad, and could save them money.

Which? is also urging the DfT to work closely with the Treasury and sector regulators including the FCA, Civil Aviation Authority and Competition and Markets Authority, as well as with industry, to ensure all travellers adequately understand their travel insurance cover and can access cover that protects them against FCDO advice related to the pandemic when international travel restarts.

Which? Money editor Jenny Ross said: “The ongoing threat of Covid-related disruption means that getting the right travel insurance for your holiday is more important than ever.

“Without closer scrutiny from government and regulators of how clearly insurers present their policies, there is a very real chance that many travellers will be left out of pocket yet again this summer.”

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