Coronavirus and Insurance Policies: What Is Covered?

As the new coronavirus has been spreading across the U.S., many Americans are worried not just about being exposed to the virus and their health. They also want to know how various insurance policies they own—or are thinking about buying—would help them financially.

Source: WSJ - Leslie Scism | Published on March 16, 2020

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Here are some commonly asked questions:

Does travel insurance cover costs associated with coronavirus?

As a general rule, standard policies sold since mid-January have specifically excluded coverage for the coronavirus. As of then, most travel insurers began classifying the virus as “a foreseen event” for which trip-interruption and trip-cancellation benefits generally aren’t available, according to travel-insurance specialists.

Some are still providing medical benefits, emergency-medical benefits and medical-evacuation coverage, according to Kasara Barto, a spokeswoman for, a travel-insurance price-comparison website.

While annoying to many consumers, this exclusion is akin to home insurers not providing coverage to your house if you tried to buy it at the same time a wildfire was approaching your neighborhood.

That said, the coronavirus is proving unusual in many ways, including that at least one major insurer says it is providing more benefits than usual in some policies.

Allianz Global Assistance, part of global insurer Allianz SE, said on March 9 that, for a limited period, it was accommodating claims that it wouldn’t otherwise for trip cancellation and emergency medical care for customers who became ill with the coronavirus, as well as cancellation claims for customers traveling to certain affected areas.

How does the coronavirus fit into more-expensive “cancel-for-any-reason” policies?

With this coverage, a policyholder can trigger benefits for “not wanting to travel due to risk of contracting the coronavirus,” SquareMouth’s Ms. Barto said.

Cancel-for-any-reason (or CFAR) policies are an add-on to standard travel policies. A standard policy typically runs 7% to 10% of the trip cost, and CFAR increases this cost by about 40%, Ms. Barto said.

The coverage generally needs to be bought within 14 to 21 days of booking the trip, according to price-comparison websites. People who planned travel as recently as mid-February are past this deadline. CFAR plans typically reimburse only about 50% to 75% of a trip’s costs.

So far this year, the average cost for a policy with CFAR coverage is $489, Ms. Barto said. Since the coronavirus outbreak, Squaremouth has seen a 325% increase in travelers purchasing a CFAR policy compared with the same period last year.

What if I get sick with the coronavirus while on a business trip—or from someone at work? Does workers’ compensation kick in?

Workers’ comp is a mandatory purchase for most businesses, to pay for medical care and lost wages of people hurt while on the job. The programs are governed by individual state statutes, and benefit levels and compensability rules vary by state, said Jeff Eddinger, an executive with the National Council on Compensation Insurance, a workers’ compensation-ratings organization in 36 states.

At a recent insurance conference for Wall Street analysts, Hartford Financial Services Group Inc. cited potential coronavirus-related claims from nursing-home workers as an example. “This is an evolving situation, and we are not providing details about the claims at this time,” a spokesman said.

Other insurers cited hospital staff as a potential source of claims.

There isn’t a universal answer as to when workers’ comp would be available, said Drew Scott of Scott Insurance Agency in Stratford, Conn. In general, to get a workers’-comp benefit, “one would have to be able to prove that he or she got sick during active employment.”

“The industry is facing an unprecedented situation in which thousands of claims could be submitted, disputed and ultimately decided through a formal hearing before a workers’ compensation judge,” he said.

At least one state—Washington—has taken steps to address how the benefits apply to health-care workers and first responders. On March 5, state officials said the program would accept claims from such workers who had been quarantined after being exposed to coronavirus on the job. They would be eligible for medical testing, treatment expenses and lost wages.

If coronavirus health-care costs aren’t covered through workers’ comp, they would likely go to a company’s health-insurance program. However, unlike workers’ comp, health insurance doesn’t cover lost wages, Mr. Scott noted.

Do I have to worry that my life insurer will go under if coronavirus deaths mount in the U.S.?

Insolvencies are unlikely, analysts say. First the question assumes that those dying own life insurance. That isn’t a given. In the U.S., sales of individual life-insurance policies fell 40% from the 1980s until flattening in recent years, according to research firm Limra.

Many Americans rely on life insurance provided by their employers. Many of those dying from the coronavirus are 70 or older, so they wouldn’t likely be covered by these policies.

What is more, U.S. life insurers’ bottom lines are protected at least somewhat in that they have lines of business that benefit when people die prematurely. Many are big sellers of annuities and have blocks of long-term-care policies on their books. If deaths rise, insurers would get out from under obligations on these contracts.

That said, there is no question that life insurers face hard times if Treasury bond yields stay at this ultralow level. Insurers invest customers’ premiums heavily in corporate bonds, which are priced in relationship to Treasury bonds.