What can the coronavirus teach us about insurance?

Risk. It’s a word you’ve likely heard a lot lately in the midst of the coronavirus pandemic. Of course, there’s the increased risk of infection if you don’t take the proper precautions, such as social distancing, wearing a mask or staying at home. However, the pandemic also has highlighted the need to protect against financial hardship and risks.

Traditionally, insurance has been a key way to soften the financial blow when things go wrong. It takes the risk away from you and puts it on the insurer, who must pay out if a disaster covered by your policy happens.

Now, though, the disaster is happening worldwide with the coronavirus disease. So that brings into question whether certain types of insurance are more important than before, less useful because of exclusions, or just as valuable as ever. Here’s what you need to know about insurance in the time of COVID-19.

Life insurance is as important as ever

For anyone who has loved ones who count on them for financial support, life insurance is essential. “No one is invincible. Even if you’re young and healthy, the unexpected could happen at any time, and if something does happen, life insurance can protect your loved ones financially,” says Faisa Stafford, president and CEO of Life Happens, a non-profit insurance resource.

The coronavirus pandemic has raised awareness about the need for term life insurance, which pays a death benefit if you die while your policy is in place. As a result, more people have been looking into getting life insurance coverage, Stafford says. “The good thing is, now is a great time to buy a life insurance policy,” she says. “There are options out there that can help you get coverage quickly and without leaving the safety of your home.”

With Haven Life, customers can apply online for the Haven Term policy and, if approved, start their term life insurance coverage immediately. In some cases, applicants can skip the medical exam if they meet certain criteria. For those who need a medical exam, temporary coverage may be available and the time to take an exam has been extended to 120 days. [Note: payment of a life insurance policy is based on the truthfulness of information provided in the application.]

Most life insurance policies will cover a death from COVID-19 as long as you were honest on your application about your health, travel and pre-existing conditions. If you’re applying for coverage, you’ll likely be asked by the life insurer to confirm that you don’t have the virus and that you haven’t been exposed to it since starting the insurance application process, Stafford says. “That is why buying life insurance now is important,” she says. “Buy it when you are healthy so that you can get the best rate and make the process as simple as possible.”

If you have coverage already, make sure you continue to pay your life insurance premiums to keep your policy in effect. If you’re having trouble making your insurance premium payments, contact your insurance agent or your insurance company’s customer service team to discuss your situation.

You can learn more about how COVID-19 impacts your life insurance coverage here.

Auto insurance refunds may be available

While life insurance is as important as ever, you might be wondering whether your auto insurance is worth the cost if you haven’t been driving much or at all as a result of stay-at-home requirements caused by the coronavirus disease. Not much risk of getting into an accident if you’re not driving, right?

That’s why many auto insurers have been giving their customers refunds and credits, says Robert Hunter, director of insurance at the Consumer Federation of America. If you haven’t heard from your insurer about getting a percentage of your insurance premiums back, reach out to see if you can get a discount, he says.

Don’t be tempted to drop your auto insurance coverage, though. “I would suggest suspending your auto insurance rather than cancelling it” if you’re not driving at all, Hunter says. If you cancel your coverage entirely, you could have higher premium payments when you want to resume coverage.

You also might want to consider switching to a pay-per-mile policy. This may help you keep auto insurance costs low if you’re not driving now and don’t regularly drive much because these policies tend to charge a low base rate each month and a few cents per mile driven.

Wedding insurance might not help during the coronavirus

Consumer advocate Hunter wasn’t a fan of wedding insurance before the coronavirus struck. “Any kind of one-event insurance is very expensive compared to the real risk,” he says.

However, he says the coverage can be worth the cost for anyone who has been lying awake at night worried about the risks associated with an upcoming wedding. But it’s important to find out what sort of coverage guarantees you can get when it comes to the coronavirus.

Wedding insurance can provide event liability coverage, which will help protect you against lawsuits for personal injury or property damage that occurs during events related to your wedding. Some event spaces require couples to show a Certificate of Insurance and to name the site as an additional insured, according to wedding insurance provider Wedsure.

Wedding insurance policies also can provide cancellation coverage if a wedding is cancelled because of a natural disaster, unforeseen circumstance or tragedy beyond control. Now that the coronavirus pandemic is a known event, some insurers aren’t offering cancellation coverage for claims related to the virus on policies purchased after a certain date. And they’re reviewing claims for events that have been cancelled because of the virus on a case-by-case basis.

If you’re planning a wedding and considering wedding insurance, Hunter recommends asking whether a cancellation policy would provide coverage related to the coronavirus. Be sure to get any promises of coverage related to COVID-19 in writing.

Travel insurance might be more necessary

When the pandemic started, travel insurance comparison website Squaremouth saw a huge spike in people purchasing policies to protect their travel plans, says Kasara Barto, the company’s public relations manager. Policies typically will reimburse travelers if they have to cancel a trip for unforeseen circumstances such as illness, injury, death, terrorism, weather or a natural disaster. Travel insurance also provides reimbursement for emergency medical costs and medical evacuation.

However, standard travel policies don’t cover viral outbreaks, such as the coronavirus, Barto says. That doesn’t make travel insurance irrelevant, though, if normal travel plans can resume but coronavirus outbreaks continue. You could add on Cancel For Any Reason (CFAR) coverage.

Barto says she normally doesn’t recommend CFAR coverage, which is 40% more expensive than a standard policy and reimburses up to 75% of costs if you cancel your trip at least two to three days before departure. But it can be worth extra cost now to protect travelers from coronavirus cancellations. Be aware, though, that you must buy CFAR coverage within the first two to three weeks after making the first booking for a trip.

Going forward, travel insurance – in particular, medical coverage — could become more essential for overseas travelers. Some countries already require foreign visitors to have emergency medical coverage, but Barto expects more will add this requirement in light of the coronavirus. She says that Squaremouth recommends that international travelers have at least $50,000 of emergency medical coverage and $100,000 of medical evacuation coverage because most U.S. health insurance plans and Medicare don’t provide coverage overseas.

Coronavirus highlights limitations of credit card insurance

Credit card companies offer a variety of benefits to cardholders, ranging from trip cancellation and interruption insurance to lost baggage reimbursement and rental car coverage. Typically, there’s no extra charge for these travel-related benefits — but the benefits can be quite limited, says Matt Schulz, chief credit analyst at Lending Tree.

“It’s interesting because the outbreak has really brought this perk front and center and shown a lot of its imperfections very clearly,” he says. Most notably, credit card insurance policies tend to have a long list of coverage exceptions and they vary from company to company.

For example, cancelling a trip because of fear of travelling due to a pandemic is not a loss covered by American Express credit cards. However, quarantine imposed by a physician would be a covered loss.

Travel-related coverage amounts also tend to be limited — especially health insurance coverage, says Holly Johnson, a travel expert with ClubThrifty.com. “None of the credit cards have meaningful medical coverage,” she says. That’s why Johnson, who traveled a total of 20 weeks last year, buys a comprehensive travel insurance policy to provide her with enough coverage to feel comfortable and why she recommends that those who travel overseas consider coverage beyond what their credit card might offer.

If you already canceled a trip because of the coronavirus, review your credit card’s guide to benefits to see what is and is not covered before calling your issuer and possibly spending hours on the phone trying to get an answer.

They say nothing risked, nothing gained. Well, insurance exists for when something is risked, and something is lost. Right now, even those of us who have taken steps to minimize our risk—to both our financial and actual health—might be facing losses. As you can see, there are a lot of factors that go into what your insurance might or might not cover right now. If you still have questions or concerns after consulting your insurer’s policy and online FAQs, the best thing to do is to contact your insurance provider directly—while maintaining a safe social distance, of course.