The spread of the coronavirus to a rising number of countries has triggered emergency responses, thrown international stock markets into a tailspin and is causing Australians to reassess travel plans and question their insurance.

Many countries remain minimally affected, the longer-term impacts are unclear and many people want to proceed with trips for any number of reasons. But no-one wants to make bookings and have plans derailed by the virus and be out of pocket because of confusion over policy cover.

Wordings for travel insurance policies vary widely, and for many people it is not clear if they will be covered in a fast-moving situation.

Jessica Tat and Elizabeth Esber from Edmund Barton Chambers in Sydney point out in a paper titled COVID-19 and Travel Insurance that it is “increasingly apparent the terms and definitions relevant to the outbreak of diseases could be improved”.

“In the meantime, insurers should adopt a pandemic claims response strategy in respect of policies already issued, which ensure that the policies respond in the fairest way possible and, in compliance with community standards and expectations that are arguably required post-Hayne royal commission,” they say.

Human-to-human transmission of the virus was confirmed on January 20 and the World Health Organisation declared a public health emergency of international concern on January 30.

In Australia the coronavirus was declared a listed disease under the BioSecurity Act on January 21 and the Federal Government’s advice as of this morning is “do not travel” to China and Iran, and to “exercise a high degree of caution” for South Korea, Japan, Italy and Mongolia.

Consumer Action Law Centre Senior Policy Officer Cat Newton says the virus has highlighted issues around standard definitions and also add-on policy sales, where people may not be focused on the detail of the cover they are purchasing.

“Travel insurance policies can be very hard to compare and we hold particular concerns when travel insurance is being sold as an add-on,” Ms Newton says. “No-one really benefits from a policy that you can’t claim on or doesn’t perform as its expected to.”

In the latest situation there are add-on policies that wouldn’t have provided cancellation cover in January when the coronavirus first became known, while some direct policies would have responded, she says.

Among those policies purchased directly there are also wide variations in wording.

As an example, an online Allianz product disclosure statement (PDS) says general exclusions include a claim arising from an actual or likely epidemic or pandemic or a threat of an epidemic or pandemic.

It points people to the World Health Organisation website and the Federal Government’s Smartraveller site for more information.

An RACV Travel PDS for cover underwritten by Tokio Marine & Nichido Fire Insurance does not mention epidemics specifically, but says general exclusions include claims arising from situations where a reasonable person could foresee that a death, illness or injury might happen.

The Insurance Council of Australia points out there are also “cancel for any reason” policies that can be considered if they are purchased shortly after booking major expenses associated with a trip.

Corporate travel insurance policies in effect before the virus was listed under the Biosecurity Act are likely to provide cover for trip cancellation for countries with a “do not travel” warning.

ICA says if people are planning to travel and haven’t bought insurance yet, they should call a travel insurer and find out what the most suitable product is.

The Australian Financial Complaints Authority (AFCA) says at this stage it has only received a small number of complaints.

“AFCA expects insurers to respond quickly and efficiently to insurance claims,” Lead Ombudsman – Insurance John Price told insuranceNEWS.com.au.

“Each claim should be judged on its merits. We also encourage insurers inform their customer of updates from the Government and the World Health Organisation where appropriate.”

Barristers Tat and Esber say longer-term solutions lie in more explicit wording and an end to vague terms which set the parameters of the cover being provided. They also suggest better communication with policyholders, which could include the use of apps, emails and text messages.

“With the unprecedented movement of people internationally and, in the national context of the Hayne royal commission, it is now more prudent than ever that insurers provide travel products that reflect current travel trends, acknowledge the complexity of issues such as disease outbreak, and clearly outline how those policies will respond,” they say.