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Forbes, April 2 2020 – Be On The Lookout For These COVID-19 Insurance Scams

Forbes, April 2 2020 – Be On The Lookout For These COVID-19 Insurance Scams

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You might hear the term “cancel for any reason” (CFAR) coverage in a sales pitch. This is a legitimate coverage type sold by travel insurance companies, but it’s sold as an add-on to a base policy. CFAR coverage is not sold as a stand-alone insurance policy. And in legitimate policies there are usually strict limitations on when you can buy CFAR and how you can use it.

  • You typically have to purchase CFAR within 14 to 21 days of your initial trip payment. For example, if you made your first trip payment in early March, you can’t add CFAR in April.
  • CFAR coverage typically adds 40% to the cost of your base travel insurance policy. If someone offers free CFAR coverage, that should raise a red flag.
  • You typically have to cancel the trip within a certain time frame of your departure. Some travel insurance companies require 48 hours before departure to use CFAR coverage.
  • You do not get reimbursed for 100% of your lost trip expenses. Most CFAR policies reimburse between 50% to 75% of your prepaid, nonrefundable trip costs.

The rules for CFAR coverage vary depending on the travel insurance company, but any sales pitch that strays beyond these general guidelines should raise a red flag. It’s a good idea to be extra vigilant, and if you have any questions about CFAR coverage, contact the travel insurance company directly to make sure it is a legitimate offer.

Some legitimate travel insurance companies have extended coverage that would typically be excluded (such as trip cancellation because of a pandemic) to travelers affected by the COVID-19 outbreak, according to Kasara Barto, a spokesperson for Squaremouth.com, a travel insurance comparison website.

“Even though the coronavirus outbreak is not a covered event under a standard policy, we’ve seen providers making exceptions and refunding policy premiums if a trip was canceled and refunded by the travel supplier,” says Barto.

The bottom line here is to be aware of scammers impersonating legitimate travel insurance companies. While some travel insurance companies have extended coverage that would typically be excluded to their policyholders during the COVID-19 outbreak, bad actors may try to take advantage of financial anxieties and sell bogus products.

Read the full Forbes article online here: https://www.forbes.com/sites/advisor/2020/04/02/be-on-the-lookout-for-these-covid-19-insurance-scams/#71a8d57174cf