California Regulator, Association Warn of Flu Implications

The Insurance Information Network of California is warning insurance agents that the current outbreak of swine flu has implications not only for travelers and businesses, but for their insurers as well.

Following are types of insurance that could be affected.

Travel Insurance
Trip insurance can provide some protection for travelers who fall ill and, under some policies, provide a financial backstop for a cancelled trip, IINC said.

• Trip Cancellation. In the event of an illness to the insured, the insurer may pay up to the policy’s limits. This requires a physician’s verification on or before the departure time.

• Cancel for Any Reason Protection. An upgrade that provides coverage for most travel cancellation. It is limited typically to 75 percent of the prepaid, forfeited, non-refundable portion of the trip. The insurer must typically be notified at least two days prior to the scheduled departure.

• Trip Interruption Coverage. If the policyholder is hospitalized or the trip must be extended due to an illness, the insurer may provide coverage for extra hotel, food and transportation costs. This would also provide coverage due to quarantine.

• Trip Delay Coverage. This provides coverage for expenses to rejoin the planned trip or return home following quarantine.

As of now, if someone was on a trip and had already purchased travel insurance, quarantines or delays due to swine flu may be covered. However, policies written since the start of the outbreak might not provide swine flu-related coverage because it is now a known issue, the association advised.

“As Californians make and change their travel plans in light of the recent H1N1 flu outbreak, I encourage them to evaluate their individual needs for travel insurance,” said state Insurance Commissioner Steve Poizner. “Travelers should educate themselves on their travel insurance options, and decide which, if any, travel insurance product might be appropriate for them.”

Businesses would rely heavily on existing risk management and business continuity policies to protect them against losses due to an emerging public health crisis. Agents should inform customers that few insurance policies exist to protect businesses against widespread absenteeism, IINC said. Business interruption coverage is triggered by a property loss.

Farm policies typically include coverage for livestock, medical payments for farm workers, including patrons of farm product stands or stores, and liability coverage for any lawsuits.

A 2006 study by the Insurance Information Institute found that a moderate influenza outbreak, such as ones those of 1957 and 1968, could cost life insurers an estimated $31 billion. A severe pandemic, like the 1918 influenza outbreak, could cost insurers up to $133 billion.

IINC is a nonprofit, non-lobbying communications association representing the property/casualty insurance industry. For more information, visit or follow the association on Twitter at

Sources: CDI, IINC