Will you receive a
refund if you cancel your travel plans due to the
Coronavirus travel restrictions?
On 13 March 2020, the Australian Department of Foreign
Affairs and Trade (DFAT) issued a global travel advisory:
Reconsider your need to travel (a Level 3 advisory) on
its smartraveller home page based on the risk of
contracting COVID-19 overseas. It is unprecedented for there
to be a world-wide Level 3 travel advisory.
A few days earlier, on 11 March 2020, the World Health
Organization had declared COVID-19 (Coronavirus) to be a
pandemic. The last time the WHO declared a pandemic was in
2009 for (H1N1) influenza.
DFAT already has Do not travel (Level 4)
advisories for China, South Korea, Iran and Italy because
COVID-19 is an epidemic in those countries.
The latest travel advisory applies to all countries,
including New Zealand. For most countries this represents an
upgrade from the ‘safe to travel’ advisories that formerly
This is the 13 March 2020 DFAT travel advisory:
We now advise all Australians to reconsider your
need for overseas travel at this time.
Regardless of your destination, age or health, if
your overseas travel is not essential, consider
carefully whether now is the right time.
We have issued this advice for two principal reasons:
1. There may be a higher risk of contracting COVID-19
overseas. You may come in contact with more people than
usual, including during long-haul flights and in crowded
airports. Health care systems in some countries may come
under strain and may not be as well-equipped as
Australia’s or have the capacity to support foreigners.
You may not have your normal support networks overseas.
2. Overseas travel has become more complex and
unpredictable. Many countries are introducing entry or
movement restrictions. These are changing often and
quickly. Your travel plans may be disrupted. You may be
placed in quarantine or denied entry to some countries,
and you may need to self-quarantine on return to
Australia. Think about what this might mean for your
health, and your family, work or study responsibilities.
The travel advisory is a DFAT Level 3 advisory. There are
Level 1 - Exercise normal safety precautions
Level 2 - Exercise a high degree of caution
Level 3 - Reconsider your need to travel
Level 4 - Do not travel
The 13 March 2020 travel advisory ends with this advice
Contact your airline, travel agent or insurance
company to discuss your travel plans and options for
cancelling or postponing current bookings, or to arrange
flights back to Australia.
This article explores the travellers’ rights to a refund
of fares and tour prices paid if they cancel their booking
with their airline, cruise line or, tour operator. It
concludes that no claims are possible for lost deposits and
cancellation fees under travel insurance.
Does a Level 3 advisory
give the traveller the right to a refund if they cancel
their overseas travel arrangements?
When a traveller books a flight, a cruise or a tour, they
have the right to cancel before departure. But if they
cancel, their refund will be limited, depending upon the
terms and conditions which apply to the fare or the tour
In response to the COVID-19 crisis, many travel providers
have announced cancellation policies which are a waiver of
their normal terms and conditions and apply to bookings for
travel within a specified period which are affected by
COVID-19 travel restrictions.
Airline cancellation policies depend upon the fare
- Budget airfares are usually completely
non-refundable if cancelled.
- Mid-range airfares will allow some partial fare
- Fully flexible airfares will allow full fare
Waiver: Qantas and Virgin Australia have announced
they will waive cancellation fees and offer travel credit
and refunds to passengers whose travel plans have been
impacted by travel restrictions because of the coronavirus
Cruise Line cancellation policies depend upon how
many days before the scheduled departure / sail date the
cancellation is notified to the cruise line. To illustrate:
- If 181 days or more, a full refund of the fare.
- If 76 to 180 days, a refund of the fare less the
- If 43-75 days, a refund of 75% of the fare.
- If 15-42 days, a refund of 50% of the fare.
- If within 14 days, no refund.
Waiver: Many cruise lines have “paused/suspended”
operations due to port closures and will offer rescheduled
cruises. They will offer credits towards future cruises, or
full refunds for cancellations up to 48 hours before
Tour operator cancellation policies also depend
upon how many days before the scheduled departure date the
cancellation is notified. To illustrate:
- If 90 days or more, a refund of the price less the
- If 60 to 89 days, a refund of the price less a 35%
- If 30 to 59 days, a refund of the price less a 50%
- If 29 days or less, no refund.
Waiver: Tour operators will suspend tours due to
travel restrictions and are offering a credit towards future
Conclusion: A DFAT Level 3 (or Level 4) advisory
does not give a traveller any right to a refund or to avoid
cancellation fees. The traveller must rely on the travel
provider’s waiver of their normal terms and conditions.
Does travel insurance
cover cancellation fees and loss of deposits if the
traveller cancels travel to a country with a level 3
Airlines, cruise ships and tour operators include advice
such as this in their terms and conditions:
You are strongly advised to take out cancellation
insurance at the time of booking which will cover
But how useful is that advice, if the reason for the
cancellation is a Level 3 travel advisory?
Travel insurance cancellation cover is subject to policy
terms and exclusions. Relevant are:
- The event giving rise to the cancellation must be
not be a ‘known risk’ or ‘foreseeable’ at the time the
policy is taken out.
- Cover is excluded if the cancellation is because the
traveller changes their plans or has a disinclination to
- Cover is excluded for epidemics, pandemics,
terrorism, and heightened travel risk (Levels 3 or 4)
The Australian Financial Complaints Authority (AFCA)
deals with disputes under travel insurance policies. These
are two determinations which deal with claims made by a
traveller for their travel payments after the traveller
cancelled the travel before departure because of a DFAT
Level 3 advisory:
Determination Case No: 511577 The traveller
cancelled their 5 day holiday to Mabul Island, Malaysia
because of a DFAT Level 3 warning on smartraveller. The
warning was based on an unpredictable security environment.
The travel insurance claim was rejected because the Level
3 warning was in place when the holiday was booked, and the
risks and dangers associated were clearly advertised.
Therefore, the risks were known – they were foreseeable and
so the claim was rejected. The claim was also rejected
because of the policy exclusion for change of plans or
disinclination to travel.
Determination Case No: 425394 The travellers
cancelled their trip to Paris due to the terrorist attacks
in Paris in November 2016. The travellers booked the trip
and took out travel insurance before the terrorist attacks.
They cancelled after the terrorist attacks and after the
DFAT Level was increased to Level 3 for travel to Paris.
Their travel insurance claim was rejected because a
specific exclusion applied to cancellation cover which was:
“We will not pay your claim if it is caused by an act or
threat of terrorism”.
The travel insurer could also have rejected the claim
because of a general exclusion which was: “Your claim arises
from an advice or warning of “Reconsider your need to
travel” or “Do not travel” which has been released by the
Australian Government Department of Foreign Affairs and
Trade or any other government or official body”.
Comment This determination is a useful precedent
for cancellations due to coronavirus. This is because there
is a specific exclusion applicable to cancellation cover in
most travel insurance policies which is triggered when there
is an “actual or likely epidemic or pandemic” (which is the
same type of exclusion as an “act or threat of terrorism”).
Separately, the Level 3 travel advisory triggers the
“Government warning” exclusion.
Conclusion: Despite both DFAT and the travel
providers advising travellers to look to cancellation cover
in their travel insurance policies, there is no cover
- Coronavirus has been a well known risk since 23
January 2020. There has been no cancellation cover for
policies taken out since that date.
- Cover for both cancellation and medical expenses is
specifically excluded for epidemics and pandemics, and a
general exclusion applies once a Level 3 travel advisory
issues. This means that there is no cancellation cover
for all policies no matter when they were taken out
because of coronavirus.
What should travellers
The DFAT COVID-19 travel advisory – Reconsider your need
to travel – may affect travel plans, but gives no rights to
travellers to a refund if they decide to cancel travel
arrangements or to make a claim under travel insurance.
Travellers need to be patient, and wait for their
airline, cruise line or tour operator to announce a
cancellation or rebooking policy which waives the
cancellation fees. The policy should offer a postponement
(with no change fee) or a full refund (if the destination
bans travel or closes their ports and borders).