What to Know About Travel Insurance During a Government Shutdown

The U.S. government shut down more than a week ago, and the effects on travel have been staggering. According to the U.S. Travel Association, America’s travel economy has lost $1.2 billion in spending so far. And travelers around the U.S. have been impacted by air traffic issues, longer security lines, reduced flight availability and more challenges.

“This shutdown is doing real, irreversible damage,” said Geoff Freeman, president and CEO of the U.S. Travel Association. “The longer this drags on, the worse the cascade of damage will be — for local communities, for small businesses and for the country.” 

So how can travelers protect themselves — and their wallets — during this disruption? Christina Tunnah, head of the Americas at World Nomads, breaks down what travel insurance actually covers; how a federal shutdown affects travel-related government agencies; and what steps travelers can take to navigate delays, cancellations and even deregulated airline policies. From maximizing claims to knowing whether clients should opt for the most extensive coverage, here’s what every traveler and travel advisor needs to know right now.

What travel disruptions usually occur during a government shutdown? 

A federal government shutdown means that funding temporarily ceases for all federal agencies. All federal workers, including those at the the Transportation Security Administration (TSA) and the Federal Aviation Administration (FAA), are furloughed, meaning they will not be paid until the shutdown is resolved. 

However, TSA agents and air traffic controllers are considered essential workers and will continue to work without pay. This could lead to federal workers not showing up for work, resulting in longer security lines, significant delays and potential flight cancellations due to a lack of staff. 

Are flight delays or cancellations caused by a shutdown typically covered under standard travel insurance policies? 

Standard travel insurance policies still apply, even if flight delays or cancellations are caused by a government shutdown. Certain insurance policies specify a minimum amount of time for a delay in order to file a claim and receive benefits such as lodging, meals and refunds for accommodations. 

If a shutdown delays passport or visa processing, can insurance cover the resulting inability to travel? 

Travel insurance typically does not cover trip cancellations due to passport or visa processing delays. Travelers who purchase a policy with named perils (events) can check their policy wording for confirmation on which events are covered under trip cancellation. 

How should travelers plan for potentially long TSA lines during a shutdown to avoid missed flights? 

Travelers should arrive at least three hours before departure to factor in potentially long lines at the security checkpoints. Major airports will see delays due to the volume of passengers. Travelers should factor in travel time to the airport, as well. 

What documentation should passengers keep to maximize the chances of a successful insurance claim related to the shutdown? 

Passengers should always seek a solution with the airline first for assistance during a delay. If there is no resolution with the airline, documents such as receipts, boarding passes and airline communications with date and time stamps are all important tools that travelers will need when submitting a claim.  

How does airline deregulation impact passengers’ right to compensation? 

The federal plan to roll back passengers’ rights means travelers may not get their money back for these disruptions, even if the airline is to blame. Travelers still have rights, including if they are stuck on the tarmac, are bumped from a flight due to overbooking and even if they are traveling internationally. Some airlines also have more favorable policies than others toward travelers, so it is important to research a carrier’s policies.  

When deregulation reduces airline obligations, how can travel insurance fill the gaps? 

Travel insurance plans can step in with several benefits to ensure that travelers’ trips are protected. Travel delay benefits can reimburse travelers for covered expenses incurred because of airline delays — for example, hotel stays, meals, taxis — up to a per-day and total maximum benefit amount. It is important to note that coverage usually starts only after a minimum amount of time, and the delay must be caused by a problem defined in a policyholder’s travel insurance plan. It is recommended to check with the insurance provider on where their coverage can fill the gaps. 

How important is a Cancel for Any Reason (CFAR) policy in an environment of increased deregulation? 

Cancel for Any Reason coverage is great for travelers seeking to avoid a potential loss on a big trip, as it covers nearly any reason for canceling travel plans. While it is great for travelers who need to cancel ahead of their planned trip, trip delay coverage is better suited for those still intent on traveling in this new environment. 

What steps can travelers take to ensure travel insurance effectively covers the risks associated with both shutdowns and deregulation? 

Travelers should research travel insurance policies that cover trip cancellation, trip delays and interruptions, as these are the travel-related risks of government shutdowns. For example, World Nomads offers a travel inconvenience benefit which can cover tarmac delays that last two or more consecutive hours, among other disruptions.

Policyholders should also check with their insurer for their coverage on lost or stolen baggage, which could potentially not be reimbursed under the Trump administration’s plans.