Consumer group Which? has recently highlighted that “complete” Covid-19 travel insurance is extremely limited within the market. While nearly all providers surveyed offered cover against medical and repatriation costs related to Covid-19, only two providers offered cancellation cover as a result of a change in Foreign, Commonwealth and Development Office (FCDO) or government lockdowns.

Which? found that the two travel insurance providers offering this cover – HSBC and Barclays – only offered this protection to bank account customers and could only be bought alongside other insurance products – therefore could not be bought by the general public.

Many people have been left wondering why the remaining 263 providers Which? reviewed do not offer cancellation cover due to changes in FCDO or government advice. And here’s why:

Most travel insurance policies do not offer cancellation cover due to a change in government advice related to Covid-19 as, in most cases, customers already have financial protection for this scenario available to them elsewhere.

For example, if the FCDO were to advise against travel to a specific holiday destination, as they have done in the past, tour operators would need to cancel all trips to that area and airlines would have to suspend flights travelling to that particular destination. Therefore, generally, customers would be entitled to request a full refund or ask to move their holiday to a later date.

If customers are unable to recover their money back through their tour operator or airline, they can also claim their money back through their bank account through a scheme called ‘Chargeback’, or via their credit card provider under ‘Section 75 of the Consumer Credit Act’ (as long as the holiday or flight was over £100).

Therefore, if insurers were to include this extra risk within their policy cover, they would need to charge the customer extra for it, and this would not be seen as offering fair value, as they would be paying an additional cost for protection that they already have available to them, for free, elsewhere.