Two major Canadian travel insurance providers — Manulife and TuGo — will no longer reimburse new customers who need to cancel their trips due to the coronavirus outbreak.

Travellers with regular trip cancellation insurance typically have been able to get reimbursed if, after booking their trip, Ottawa issued a coronavirus-related advisory to avoid non-essential travel to their destination.

However, Manulife and TuGo will no longer offer this type of coverage. Both companies told CBC News that the coronavirus is now a "known" issue and therefore cancellation coverage no longer applies — as it's designed for unexpected mishaps.

Travel insurance broker Martin Firestone says he believes other companies will likely follow suit, to avoid the huge costs that could arise as the coronavirus spreads globally.

"They are opening themselves up to millions of dollars of claims that they will have to pay unless they invoke this," said Firestone, with Travel Secure in Toronto. "If this thing blows up and it becomes a pandemic, all these countries are going to get on the [no] non-essential travel list."

The chances of getting your coronavirus-related cancelled trip covered by travel insurance is narrowing as two companies are no longer offering the coverage. (Mark Schiefelbein/The Associated Press)

TuGo's change went into effect on Wednesday for policies purchased on or after that day.

"We've identified COVID-19 (coronavirus) as a known circumstance," said spokesperson Melissa Kaerne in an email. "That means it is no longer considered sudden and unexpected, as it is a global health issue."

Manulife expressed a similar position in an email. The company confirmed that starting Thursday, customers who purchase travel insurance will no longer be reimbursed for coronavirus-related trip cancellations.

Manulife said that the exception to the rule would be travellers who purchase the "Cancel For Any Reason" (CFAR) option that provides coverage for any type of trip cancellation.

The CFAR option comes at an added cost and generally only covers up to 75 per cent of a cancelled trip.

No longer unexpected

The federal government has issued coronavirus-related advisories against non-essential travel to China, Iran, northern Italy and parts of South Korea.

As the coronavirus spreads, that list will likely grow, but neither Manulife nor TuGo will cover new customers who book trips to any destinations that get added to the government's list.

Industry expert Will McAleer says cancellation insurance is supposed to cover sudden and unanticipated events, such as falling ill and not being able to take your trip. He said companies cutting off coronavirus cancellation coverage have likely deemed that it no longer fits in that category.

"They appear to be saying that, 'Hey, you know about it,'" said McAleer, executive director of the Travel Health Insurance Association of Canada.

"We've now seen [the virus] spread from country to country and as a result, thinking that it could spread to yet another country should certainly be something that we can all expect."

Firestone advises travellers who haven't already purchased insurance and plan to travel during the coronavirus outbreak to start shopping around, as he anticipates other providers will also change their cancellation coverage.

"I think they're all going to jump on the bandwagon."

While some travellers may feel the new development is unfair, Firestone points out that travel insurance was designed to cover the odd mishap, not large numbers of travellers cancelling their trips — which could become the case with the coronavirus outbreak.

"That's changed the odds," he said. "Everyone's got these sort of loss-ratios they work on and they all got thrown out the window with this."

Meanwhile, bucking the trend, Air Canada, WestJet and Air Transat have each announced new policies that actually broaden coverage for travellers during the coronavirus outbreak. Air Canada and Air Transat passengers booking a flight between March 4 and 31 for travel over the next 12 months can now make changes at a later date, free of charge.

WestJet passengers booking flights between March 3 and 17 for travel through June 24 will also be allowed to make a flight change for free.