Coronavirus outbreak: exclusions could rule out cover

The local insurance industry has warned that “broad exclusions normally apply” to pandemics and epidemics such as the current coronavirus outbreak.

Novel coronavirus (2019-nCoV), which was first reported in the Chinese city of Wuhan on December 31, fits the definition of an epidemic but is not yet considered a pandemic. According to the World Health Organisation’s latest update there have been 4593 confirmed cases globally, with 4537 in China. There have been 106 deaths, all in China.

The Insurance Council of New Zealand (ICNZ) says global pandemics are “generally not insurable and haven’t been for a long time”.

“This is because insurers can’t measure or understand what potential losses could eventuate from an outbreak of an infectious disease like this,” CEO Tim Grafton said.

Exclusions are not uniform across all policies, however.

The Insurance Council of Australia (ICA) says while many travel insurers have exemptions “for outbreaks of infectious diseases and pandemics”, each insurer’s policies are different.

“Some travel insurance policies will cover travellers whose travel plans have been disrupted by the coronavirus or who have incurred medical expenses,” spokeswoman Lisa Kable told

“This will depend on when the policy was bought and when the claimant started their trip.”

ICNZ warns that the outbreak and associated exclusions could also affect insured businesses.

“Unfortunately, the same exclusions would apply, which means there would likely be no cover for loss or damage to property, or interruption or interference to the insured business as a result of the coronavirus outbreak,” Mr Grafton said.

LMI Group Chairman Allan Manning says in his blog that no clear answers can be given without examining individual policies.

But he says as a general rule “quality” corporate travel policies would provide coverage if the policy was taken out prior to the start of the outbreak. However, many leisure travel policies would contain exclusions.

“Now that the outbreak is known, it is unlikely any insurer will provide the coverage moving forward as insurance is there for the unexpected not the certain,” he says.

In relation to business interruption, he says bizpack policies tend to exclude pandemics, and any notifiable disease under the Quarantine Act 1908.

ICA has urged travel insurance customers who have suffered disruption due to the virus to contact their travel agent, and transport and accommodation providers in the first instance “to seek refunds or make alternative arrangements”.

Insureds are also urged to refer to their individual policies to understand the level of cover provided.

Zurich-owned Australia-based travel insurer Cover-More told it provides more than 70 different policies to distribution partners “offering differing levels of coverage”.

“There is cover available for medical expenses under many of Cover-More’s travel insurance policies if a customer travelling overseas contracts the coronavirus and is hospitalised,” EGM Sales & Distribution for Asia Pacific Mike Stein said.

“However, even if medical cover is available to customers for this event, there may not be cover for travellers’ cancellation or amendment of travel plans and other additional expenses as a result of the coronavirus epidemic.”

Cover-More believes the local travel insurance industry will not suffer as a result of the current outbreak.

“The overall key driver of travel insurance sales is growth in the outbound travel market in Australia, and history shows us that our market is resilient to external global shocks,” Mr Stein told

“The start of the Global Financial Crisis in 2008 and the swine flu epidemic in 2009 did not produce a significant dent in the long term growth in the value of the Australian travel insurance market.”

Published by Insurance News