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How Does COVID-19 Affect Trip Insurance and Cancellation Refunds in Canada?

As the situation regarding COVID-19 continues to develop, international business and leisure travel have become an anomaly."  Many Canadians will be staying home for the foreseeable future. For savvy travelers who booked their vacations months in advance, it is likely that their plans have been cancelled, or will be cancelled over the coming weeks and months. This is due to actions taken by the federal government and service providers alike. For those concerned about receiving refunds for their cancelled, or soon to be cancelled, travel plans, the key is to look at the provisions of each contract made with a service provider - including but not limited to; travel insurance providers, airlines, cruise providers, and hotels. In instances where travelers purchase travel insurance, there is no one-size-fits-all answer regarding the possibility of a refund. Insurance policies can greatly differ, and an analysis of coverage is typically fact-dependent. Depending on the following facts, coverage for cancelling or rescheduling a trip may be available;
  • when the trip was booked," 
  • the originally-scheduled departure date," 
  • the level of coverage purchased," 
  • the insurance provider itself
Recently, some budget-minded travelers have taken advantage of booking vacations over the past weeks due to significant price reductions. While this may be seen by some as a cost-effective method of vacation planning, it could result in the denial of travel insurance coverage. Many travel insurance providers will deny coverage if travel is booked after a governmental travel advisory is enacted. On March 13, 2020, the Government of Canada issued an official global travel advisory, indicating to Canadians that all non-essential international travel should be avoided for the foreseeable future."  Cancelled travel impacts more than the coverage of one's travel insurance; there are numerous other service providers that a traveler can enter into a contract with when planning a vacation. Ontario legislation, and a common law principle, can assist travelers in receiving refunds from service providers, as long as the contract was not for insurance. There is Ontario legislation called The Frustrated Contracts Act, which would allow for refunds to be granted when a critical part of a contract is impossible to fulfill. In these circumstances, the contract is said to be "frustrated"."  Depending on the type of contract made, this could assist travelers seeking refunds for cancelled services. For example, due to the restriction of non-essential travel across the U.S.-Canada land border beginning on March 21, 2020, a pre-booked trip across this border would have been cancelled. If a travel already paid for their trip, the legislation would likely allow for a refund to be granted. If payment had not yet been provided, the legislation would likely eliminate a traveler's obligation to pay. This is also a fact-based analysis, and again there is no one-size-fits-all answer."  Wondering how our law firm is dealing with the COVID-19 crisis? Follow the link here for more information.

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