Will travel insurance protect me for job loss?

If you are faced with job loss before your vacation, will travel insurance cover you?

job lossYou might assume that the answer is “yes.” Doesn’t every travel insurance policy come with job loss protection? Most do, but not all.

Today, the unemployment rate is around 10 percent. A lot of people are wondering about the job loss protection that their travel insurance plan offers. The answer is complicated. Travel insurance can cover cancellation after disasters at your workplace. This includes natural disasters and mergers (which may qualify as a human-made disaster). It normally offers broad protections for changes in military orders and work reassignments.

And while many policies come with significant layoff insurance coverage, there are also significant and important restrictions.

“Given the uncertainty of the current environment with COVID-19 and high unemployment rates, many travelers are wondering if travel insurance can provide protection if they lose their job,” says Christine Buggy, vice president of marketing at Travelex Insurance. “Fortunately, travel insurance can provide trip cancellation coverage for job loss as well as other work-related reasons.”

For example, a typical Travelex policy will cover job loss:

When disaster strikes. You are covered if a burglary, fire, flood, volcano, earthquake, hurricane, or other natural disaster renders your place of employment “unsuitable” for business. Or, if you’re required to return to work as a result, you’re covered. This also applies to your travel companion.

If you have military orders. You may be called up for active military service to provide aid or relief in the event of a natural disaster. You can file a trip cancellation claim in that case.

When you’re terminated. If you’re involuntarily terminated, insurance kicks in. Some restrictions apply. You must have been continuously employed with the same employer for one year before the termination or layoff. Temporary workers, independent contractors, or self-employed persons don’t qualify.

If you’re transferred.

Read your travel insurance plan carefully

Get refunds in cash when airlines cancel your flightThere are few standards when it comes to employment coverage on travel insurance.

“Many travel insurance plans can help if you need to cancel or interrupt a trip because of job loss,” says Jeremy Murchland, president of Seven Corners, a travel insurance provider. “To know for sure if you have coverage, review the policy verbiage by looking for a covered reason related to employment termination.”

Most coverage applies to involuntary employer termination or layoff. But Murchland says you also need to check for a qualifier around the length of employment, since many plans require you to have been employed with the same employer for a specified time. One year is common, but it can be longer.

You can also pay a little extra for additional coverage. For example, Seven Corners’ RoundTrip Elite policy offers a “Trip Cancellation for Work Reasons” option. It provides a range of coverage for things like being required to work during a trip. The policy will also help when you are involved in a merger for your employer. An employment transfer that requires you to relocate your residence could also be covered. And, being required to work because your place of employment is unsuitable for business due to fire or flood may be covered. The price varies based on your age and your state.

What if you already bought a travel insurance plan?

job lossFortunately, most travel insurance policies have some layoff coverage. So if you already have a policy and are getting ready to travel, you’re probably covered.

“It’s understandable your travel plans may change considerably if you lose your job or if you’re called to military duty before your trip,” says Sherry Sutton, vice president of marketing at Travel Insured International. “If you have to cancel or interrupt your plans, contact your travel insurance company. You can submit a claim for possible reimbursement of some or all of your nonrefundable trip expenses.”

Travel insurance and job loss FAQ

Can travel insurance cover job loss if you’re self-employed?

If you’re an independent contractor, a garden-variety travel insurance policy probably won’t cover you. “Some policies offer this coverage for travelers who are self-employed,” says Kasara Barto, a spokesperson for Squaremouth, a travel insurance provider.  “It is also important to note that if travelers are specifically looking for this coverage, they must purchase a policy before their job has been impacted in order to be eligible.”

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What if I don’t lose my job but have to work?
Travel insurance can also provide trip cancellation and interruption coverage for other work-related reasons beyond termination. “You may be protected if you are required by your employer to work during your scheduled trip,” says Christine Buggy of Travelex Insurance. Some policies also cover a merger or acquisition. It’s all in the fine print.
Could my job loss coverage change?

That’s a fair question since travel insurance companies make changes to their policy terms. In some cases, travel insurance companies expanded benefits last year related to job loss.

Once you buy your policy, it doesn’t change. But make sure it has what you need before you buy it.

Features photo by Abigail Keenan on Unsplash