Before the COVID-19 pandemic, unpredictable circumstances like natural disasters, political unrest and health insurance restrictions mainly drove the need for travel insurance. Now, the pandemic has created uncertainty in the future of travel, and purchasing an insurance policy may become part of the new normal. As a result, policies are being redesigned to adapt to consumers’ needs.
To some, travel insurance may be confusing. Most credit cards offer travel insurance when used to book travel, so consumers may not understand the difference between that and purchasing a separate travel insurance policy. There are also many upgrades and optional benefits for consumers to consider when purchasing the most cost-effective policy. ValuePenguin turned to Karasa Barto, PR Manager of Squaremouth, for insight.
Established in 2003, Squaremouth is a U.S. travel insurance aggregator that allows travelers to compare over 90 policies from 23 different providers. Squaremouth’s proprietary software is designed to help customers find the least expensive policy that includes the benefits needed for their trip. Read on to learn more about travel insurance and the impact of the COVID-19 crisis from this industry leader.
Q: What is the main difference between a travel insurance policy and the travel insurance through a credit card?
Kasara Barto: Credit cards and travel insurance can both include trip cancellation coverage, and will typically cover the same common concerns including illness, injury or inclement weather. However, most credit cards only cover trips purchased on that card and limit their coverage to a specific dollar amount, typically between $1,500 and $10,000 per trip, regardless of how much the trip cost. A comprehensive travel insurance policy can cover 100% of the trip costs and also offers additional benefits, including preexisting condition coverage and the option to upgrade to “Cancel for Any Reason”.
Q: How have Squaremouth’s offerings adjusted since the onset of travel restrictions due to COVID-19?
Kasara Barto: COVID-19’s unprecedented impacts on the travel industry changed traveler concerns and behavior instantly. In response, some of Squaremouth’s providers have already come to market with new products designed to meet these evolving needs.
For example, in response to widespread cases of COVID-19 in the U.S., April Travel Protection launched the April Pandemic Plus policy, offering cancellation and medical coverage if a traveler contracted the coronavirus. With domestic travel rising in popularity, Tin Leg launched “USA Only”, a cancellation-focused product geared toward domestic travelers that offers minimal medical coverage.
Overall, 10 providers on Squaremouth.com include coverage for COVID-19, specifically, medical and cancellation coverage if a traveler contracts the virus or is physically quarantined.
In terms of travel insurance, for there to be coverage for any event, a traveler must purchase a policy before the event occurs. After the COVID-19 outbreak became widely known on Jan. 21, many travel insurance providers stopped covering losses related to the outbreak. However, despite widespread knowledge of COVID-19, those 10 providers are still covering losses related to contracting the virus on new policies purchased. These providers can offer medical or cancellation coverage if a traveler contracts the virus or is physically quarantined.
Q: Are there any new or unique services designed to help people during the current pandemic?
Kasara Barto: When COVID-19 impacted travel worldwide, Squaremouth understood that there would be an influx of questions and concerns from customers, either looking to buy a policy or wanting to understand their current policy. In preparation for a wave of customer requests and claims following canceled travel plans, Squaremouth extended our claims hours of operation, and implemented an “all hands on deck” service to handle customer service calls.
Many of Squaremouth’s providers have accommodated travelers whose trips were impacted by COVID-19. While most travel insurance policies can only be canceled and refunded within 10 to 14 days from purchase, we have seen providers make exceptions in this case.
As many trips were canceled and refunded outright, customers no longer needed their travel insurance coverage. Providers are offering flexibility for these customers, providing premium refunds or vouchers for a future purchase, even for customers well outside of the money-back guarantee period.
For example, Squaremouth’s own proprietary provider, Tin Leg, developed a new voucher system to accommodate travelers whose trips were impacted by the COVID-19. Affected customers are eligible to receive a voucher for the full amount they paid for the premium, and are able to apply the voucher to a policy for a future trip.
Q: What are the trends you are seeing in the travel insurance space and do you anticipate any of those to continue after travel restrictions have been lifted?
Kasara Barto: We have seen a shift in traveler behavior post-COVID-19, with 57% of Squaremouth customers planning to travel domestically, compared to just 12% the previous year.
While COVID-19 has caused a drastic decrease of almost 90% in the number of travelers visiting international destinations, the number of domestic travelers is only down by 5%. We expect this new behavior will continue for the foreseeable future, with a shift to road trips and vacation rentals over flights and hotels. As such, travel insurance providers are creating more products geared toward the domestic traveler, which includes cancellation coverage to protect their trip investment.
Following the unprecedented impact COVID-19 had on the travel industry, we anticipate travelers will remain concerned about future pandemics halting travel. In response, some providers have already begun developing policies that will offer more coverage for some of the impacts of a future pandemic, such as travel warnings related to viral outbreaks and CDC alerts.
Q: As many may be seeking to purchase travel insurance for the first time, what do you believe they would be most surprised about? Any tips or suggestions as they navigate policy options to best suit their needs?
Kasara Barto: The biggest misconception is that travel insurance will cover anything that may go wrong on a trip. Just like other types of insurance, travel insurance offers protection for a specified list of perils and simply cannot provide coverage for everything. If a traveler has a specific concern, Squaremouth recommends confirming that it can be covered before they purchase a policy, and then purchasing the least expensive policy that meets their needs.
There are many benefits included in a standard policy that people may not be aware of. For example, emergency medical coverage can prevent costly medical bills if an emergency happens while traveling abroad. Many policies also include travel delay coverage that can make unavoidable flight delays more comfortable, by reimbursing travelers for the cost of meals or accommodations. Coverage to cancel also typically extends to family members and in some instances, even business partners.
Q: What about the travel insurance industry is most worrisome?
Kasara Barto: Consumers may be hesitant to purchase travel insurance in the future, as COVID-19 highlighted an event that wasn’t widely covered by travel insurance because it was something that had never happened before. Similarly, before the 9/11 terrorist attacks, terrorism wasn’t something typically covered by a standard travel insurance policy, now it is a commonly included benefit on the majority of policies. We know that providers are already taking customer concerns into consideration with new policies and benefits, but it is important for consumers to understand that a standard travel insurance policy cannot cover everything.