As per the following links to the websites of the Association of British Insurers and the British Insurance Brokers' Association, there currently appears to be no difficulty with getting travel insurance for Europe, i.e. no reports of significant increased prices in response to the Corona virus risk nor reports of any insurers introducing an exclusion for losses caused by Corona virus.
https://www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-qa/https://www.biba.org.uk/latest-news/travel-insurance-and-coronavirus/This would appear quite logical: as it stands the number of travellers likely to be affected by Corona virus in Europe is likely to be a relatively small percentage of those people with travel insurance (and the number of insurance claims correspondingly small), since the current strategy of governments and local authorities of imposing lockdowns etc. is only likely to happen (and be effective) while outbreaks are small and limited in number.
If/when outbreaks involve more people and are more numerous, then it looks likely that those imposed isolation/containment strategies will no longer be viable or effective, and as the virus spreads through the general population the strategies will have to change, presumably to a similar response to that used for a lot of other infections, e.g. the sort of general recommendations to follow when there is a general outbreak of flu, measles, norovirus etc. In that scenario, it's unlikely that the UK government will advise against travel to other European countries given that the risk of contracting Corona virus will probably be little different from in the UK, and hence there would similarly not be large numbers of claims for holiday cancellation as a result of following advice from the FO not to travel.
I suspect therefore that more important than having travel insurance because it will cover against cancelling a holiday on FO advice not to travel to that location, will be having travel insurance because it will/may cover against things like:
- having to cancel your holiday because
you (or possibly a member of your family) contract Corona virus and are too ill to travel as a result
- increased costs and disruption while on your holiday as result of Corona virus, e.g. if you contract Corona virus and the symptoms are so severe that you need to stay in hospital and/or have to miss your scheduled flight home, or if the hotel/campsite you had booked is closed not because of a government imposed lockdown but simply because too many staff are off ill with Corona virus.
In other words there could be any number of unforeseen consequences of the Corona virus spread, so you should always have travel insurance (and even then it might be that some of the impacts of Corona virus will be so random/not a direct consequence of the outbreak that they might not always be covered by a travel insurance policy, e.g. if half the restaurants in a resort are closed due to staff illness and the remaining restaurants put their prices up to exploit the shortage of supply/increased demand, the increased cost of eating out would almost certainly not be something that insurance would cover).