Contributors: Lauren Squier, Associate Designate and Alisha Naik, Candidate Attorney
Introduction
Covid-19 has brought additional strain to the already struggling South African economy. One of the industries that has undoubtedly been hardest hit is the global Travel and Tourism industry (“the industry”). This article explores several insights around travel insurance in light of this.
Travel and Tourism Industry
The Regulations to the Disaster Management Act 57 of 2002 (“the regulations”) divides the services provided within South Africa into two categories: essential and non-essential services. The industry was deemed to be a non-essential services provider.
Establishments that may remain open during the lockdown period, in terms of the regulations, are limited to those providing accommodation for international tourists (who must remain in their hotels) and persons providing essential services and those who have been pre-approved by the Department of Health as appropriate quarantine facilities.
No other accommodation establishments may continue operating during the lockdown period.
Certain establishments (Apartment-Hotels / lodges / timeshare) may have self-catering facilities, however, in these cases, they will be able to operate as residential establishments and not as hotels and there cannot be any hospitality service offered, as all staff must be at their homes during lockdown.
What if a traveller was already in the country prior to 26 March 2020 and is only due to leave thereafter?
Should establishments already be housing international guests awaiting their departure after the lockdown date, those international guests must quarantine themselves in the establishment that they are residing in until such time that their departure from South Africa becomes available and is confirmed.
International tourists must inform their respective embassies that they are still in South Africa.
Travel insurance and COVID-19
Travel insurance agreements form binding contracts concluded, in writing, between the insurer and the consumer. The contracts of insurance consist of the policy schedule and the policy wording and cover is awarded or limited in accordance with these documents.
In the ordinary course of events, travel insurance cover generally applies to unforeseen situations, unless otherwise specified in the policy schedule or policy wording. Most travel policies do not cover cancellation or curtailment resulting from COVID-19 and, if they do, there are limitations expressly included, e.g. policies that expressly exclude cover for losses arising from epidemics or pandemics.
South African insurance companies dealing specifically in the area of travel have, in some cases, started offering Covid-19-specific cover, and some are actively advertising this as a benefit to those who may have international travel plans.
Travel insurance provisions for COVID-19
You are advised to read your policy schedule and wording carefully. Given the rapid rise in travel bans, consumers are encouraged to ensure that no travel ban is in place during the dates of travel prior to purchasing a travel insurance policy. Generally speaking (and dependant on the terms of the contract of insurance) policies purchased during a known travel ban will not be valid during that period.
Some insurers have been proactive in amending their policies to provide for cover in relation to COVID-19 and/or similar circumstances. These may include, but are not limited to the following examples: –
- Medical quarantine: should the insured be obliged to extend / seek additional accommodation for the purposes of an ordered quarantine;
- flight cancellation by the airlines;
- event cancellations that were pre-booked prior to the cancellation of a trip;
- cancellation of your trip where a whole city / region has been isolated and / or locked down;
- cancellation of your trip due to your reluctance to travel due to COVID-19; and
- repatriation to South Africa due to a global threat of the virus.
What if a trip was pre-booked prior to the lockdown?
Since the announcement of the lockdown, many reservation agencies have reviewed their travel insurance policies. Some insurers have indicated that all amendments and postponements will not be personalized or charged extra fees. Others note that tourists who do not have a new date proposed for their booking must contact various call centres tasked with rebooking travel arrangements.
However, cancellation clauses may still be given full effect to, in that customers will be subject to the standard cancellation terms and conditions.
It is important to peruse the contract of insurance to examine the provisions in relation to amendments, postponements and cancellations of bookings within the industry. Each case is dealt with individually and is assessed on a case-by-case basis, subject to the policy schedule and wording.
Going forward, what does this mean for travel insurance?
In the near future, travel insurance companies may charge higher premiums for pandemic coverage. Additionally, they could further raise premiums for travellers over a certain age, deemed to have a higher biological risk profile.
Conclusion
Holders of travel insurance are encouraged to contact their travel insurers directly to determine their position in relation to the management of their bookings.
Whether or not you are able to amend or cancel your travel bookings, without suffering financial hardship, depends on a variety of factors including but not limited to the type of travel insurance obtained, the provisions thereof, the date on which the insurance was purchased, and the date of the booking for which the insurance is intended to cover.
Similarly, should you have any disputes with your insurer, we suggest that you approach us to assist you.
