The debatable legal question that arises on account of the widespread travel restrictions imposed by various countries on their citizens worldwide is “Whether the Insurance Companies would be liable to compensate the insured for the losses suffered on account of the travel restrictions/advisories issued by the governments on their citizens across the globe”.
The most important consideration that arises today is what generally the insurance companies include in their travel policies under the head “TRIP CANCELLATIONS AND INTERRUPTIONS”. On a detailed analysis of this clause in various general travel insurance policies, one would note that generally in pre-corona times the travel Policies would be worded as:
“The place intended to be occupied by the Insured / Insured Person for purposes of Insured / Insured Person’s stay during the trip or the destination being made uninhabitable by fire, flood, vandalism, burglary, or natural disaster”.
On a careful reading of the above clause, our attention would be attracted to two very important words i.e. “uninhabitable” and “natural disaster”. The interpretation of these two words in the travel policies would give rise to numerous litigations in the near future, as the insured consumer will start asserting its insurable claims for the losses suffered against the travel policies issued by the Insurance Companies.
While one aspect out of the two which is “natural disaster” is abundantly settled as a pandemic cannot be construed as a “natural disaster”, however, the other aspect i.e. “uninhabitable” will be more problematic for the Insurance companies as it will surely lead to numerous litigations owing to the wide meaning this particular term can assume if interpreted liberally.
To put things in perspective, let us read the Oxford dictionary meaning of the word “uninhabitable”:
“(of a place) unsuitable for living in.”2
A plain reading of the definition makes it abundantly clear that any country suffering from this deadly virus would be unsuitable for travelling for any purpose be it leisure or business.
The above discussion leads to one pertinent legal question i.e. how insurance companies can escape liability for travel insurance claims when the intended place of visit becomes “uninhabitable” on account of the COVID 19 pandemic as declared by the World Health Organization (WHO).3
The insurance companies may raise a defense that the travel losses on account of the COVID-19 crisis are nowhere expressly covered in the travel policies issued by any of them, however, the legal lacuna in that argument is that most of the pre-corona travel insurance policies neither define the term ‘Pandemic’ in exclusion nor expressly include COVID-19 in the exclusion clause.
In all times to come, travel insurance companies may including the term “COVID 19 pandemic” in the exclusion clause in future travel policies. However, it may be interesting to note how travel insurance companies would escape the liability for the policies that are already issued by them during the pre-COVID-19 times, and the future claims arising thereof.
Prateek Kumar is a partner at Chambers of Jain and Kumar. The firm is a full-service law firm located in the heart of Delhi with a network of lawyers across the country.
Prateek is an Alumni of Amity Law School, Delhi, Indraprastha University, enrolled with the Bar Council of Delhi in the year 2016. He is a lawyer with expertise in the laws relating to Criminal Law, Arbitration laws, Insurance Laws, Banking laws and Intellectual Property Rights. His area of practice has largely been the Delhi High Court, District Courts of Delhi and various Tribunals, wherein several of his judgements have been reported.
In the past, he has worked in a tier-one Intellectual Property Law firm and subsequently with a former Special Public Prosecutor of CBI before the Hon’ble Delhi High Court. He is also a member of Delhi High Court Bar Association.
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