Close up of travel insurance form
Across the country, people are skittish about making travel plans because of uncertainty about the future spread of the coronavirus (COVID-19). To assuage some of those fears, at a March 6th briefing on the novel coronavirus, Governor Andrew M. Cuomo announced that insurers in New York State will now be permitted to sell Cancel For Any Reason (CFAR) policies to residents and businesses in New York State.
For the past 10 years, the State did not allow these policies to be sold because CFAR wasn’t considered insurance, per se (since the traveler had control over the event that would lead to payment).
The new guidance issued by the Department of Financial Services allows travel agents and insurers to offer the coverage in New York State so businesses and residents can feel more secure about booking travel to destinations not currently under a COVID-19 travel advisory.
“With this action, New York State is demonstrating that government can and must do its part to help people navigate through this ever changing situation so they can proceed with their daily lives and routines,” said Linda A. Lacewell, Superintendent of Financial Services. “We want to make sure that travelers and business owners are provided accurate information and a measure of relief as they make travel arrangements during this time,”
Six global and national insurance companies have agreed to offer the CFAR coverage to NYS residents: Allianz, Nationwide, Starr Indemnity, Berkshire, Crum & Forster, and Zurich.
The DFS guidance notes that CFAR policies are “separate and distinct from standard travel insurance, and should not be sold together per New York State Insurance Law.”
A recent press release from travel insurance comparison site, Insure My Trip notes that standard policies usually exclude coverage for epidemics, pandemics or other public health events—making CFAR upgrades the only option available for cancelling a trip due to fear of getting ill or concerns over COVID-19. Since the first travel-related case of novel coronavirus (COVID-19) was reported in the U.S., Insure My Trip has seen a 60 percent increase in policies sold that include a specific CFAR benefit.
However, consumers need to understand the benefits and limitations of CFAR coverage. For example, CFAR coverage rates are substantially higher than standard travel insurance. Normally, they allow up to a 75 percent refund of prepaid, non-refundable costs due to trip cancellation up to 48 hours before departure. Also, the policies need to be purchased within 14-21 days of making an initial trip payment or deposit.
Because of uncertainty about the geographic spread of the virus, the change in NYS policy is intended to make travelers less apprehensive about booking future vacations or business trips, and should also benefit the struggling travel industry.