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Coronavirus / Covid-19 / Travel Insurance

Coronavirus will upset the travel plans for millions. In the vacation rental industry the guest (or hopefully the insurance company) assumes the risk that the guest will still be able to make the trip. Unlike a hotel, a vacation rental does most of it’s bookings a year in advance. Last minute bookings (within 6 months) are uncommon. This is why cancellation policies are strict. An empty week is income that will never be recovered and will effect everyone invloved in the business. To protect our guests we tell them that they should always purchase travel insurance. Note that most basic travel insurance policies will not cover items known as “Force Majeure“. These are big events such as war, terrorism, earthquakes and Epidemics. There is a type of policy called CFAR – cancel for any reason. These are much more expensive and cover only 50 to 75% of the cost of a trip. They are the most searched type of policy but the least purchased type of policy.

No one knows which way this epidemic will go so there is no sense in trying to make definitive statements on the situation. There are a few things that can be said with certainty.

  • There has been already a tremendous monetary reaction.
  • The increased emphasis on public safety, regardless of the effects of this virus, is a good thing.
  • If this is not the end of humanity there will be a recovery and then this reaction will be seen as a massive over-reaction.
  • If this is the end of humanity, or at least a permanent epidemic, then we are all screwed anyway.

We have received our first “cancellation inquiry” for summer 2020. Some members of an elderly group (75-80) were apparently getting “cold Feet”. This was not a official cancellation request, just an inquiry and prompted this blog post.

Here is the relevant paragraph from our lease which controls all requests for cancellation.

Cancellation; If TENANT desires to cancel this lease TENANT must notify VCJ Property, LLC by certified mail or by email properly replied to by VCJ Property, LLC. If the term of this lease can be re-rented for the same amount of rent, TENANT will receive a refund from the LANDLORD, less a cancellation fee of 25% of the total rent due for the term. If the term cannot be re-rented for the same rent then TENANT is still responsible for and required to pay the total rent due less any rent paid for the Lease. TENANT should purchase insurance to cover their trip against cancellation or travel interruption. If LANDLORD has provided a “Right of First Refusal” to another party and TENANT has given a deposit of less than 1/2 of the total amount due then LANDLORD may cancel this agreement by returning all funds paid to LANDLORD by TENANT.
We ourselves are also travellers and have sympathy for this situation. We are in the same boat and have a trip scheduled for Croatia this coming May. We also just returned from a ski trip to Colorado and saw the precautions being taken by the public and the companies involved in travel. We fully understand this group’s concern. That said it is rather premature to be actually cancelling a trip when the full impact of the corona virus is still unknown. For this reason we urge all of our guests to continue to purchase travel insurance to protect the value of your trip. Currently there is NO advisory on travel within the United States.
Information on travel from the CDC

Insurance Companies

What an insurance policy might cover is key. They are not going to cover big things that effect a lot of people. These are called “Force Majeure” or sometimes as acts of God.
Claims due to known, foreseeable, or expected events, epidemics, or fear of travel are generally not covered, and coverage can vary by state. “

https://www.allianztravelinsurance.com/coverage-alerts/2019-novel-coronavirus.htm

The exact language of the policy will control. A sympathetic Doctor could provide you the note that you might need.
The only policy that allows for Force Majeure is “cancel for any reason travel insurance”. This seems to be the only option that will cover circumstances such as “fear of travel”.
Here is a firm that offers CFAR, it is owned by AIG
and another by Generali
Here is a type of travel insurance that covers an entire year of travel and medical evacuation.