The Insurance Council says the new Covid-19 variant, Omicron, means travellers should be warier than ever when booking trips.
Insurance Council chief executive Tim Grafton said it was essential to check with insurers what was and was not covered in relation to the pandemic.
"Well, first of all you take out standard travel insurance to cover you from non-Covid related medical costs, lost and style language, and non-refundable cancellation costs.
"And then you can buy from some companies a Covid extension. That Covid extension will cover you if you get Covid whilst you're overseas and incur medical costs or travel cancellation costs and the like."
He said the Covid-19 extension would be personalised.
"So it's particular to you if you get Covid, or even before you travel if you have to cancel your trip, then you'd get covered, and also your partner that was travelling with you.
"But what this cover will not cover you for is that any decision by a government or a state that closes borders, mandates that you have to go into quarantine ... and all those sorts of government-mandated decisions."
Grafton said if a person went overseas, but the government decided to close the borders before their return, "then those additional costs would not be covered by the Covid extension policy to your travel".
He said travel to countries where Omicron was present would be classified as high risk and official advice would be not to travel there.
"The risks are elevated and you've got to think through what could happen if I went to a particular destination. Things will be well beyond your control if governments around the world made quick decisions about cancelling flights as we've seen in the past three days.
"Travel well and wisely, definitely look to take travel insurance with the Covid extension, but also plan for what insurance won't cover you for.
"Talk to your insurer because it's always important to know what they will cover you from, but just as important to know what they will not cover for."