There will also be overseas medical assistance if a customer contracts COVID-19 while abroad.
Also covered are costs associated with an extended stay and a new return flight home if customers are asked to self-isolate while on holiday.
Lastly, there will be a dedicated 24/7 emergency hotline and app.
TUI also announced the new raft of destinations that will be added this month.
The holiday brand is adding even more destinations in Spain and Greece to its programme from July 25.
From this date, TUI will fly to the following Spanish hotspots: Menorca, Malaga, Alicante, Reus, Fuerteventura and Gran Canaria.
In Greece, TUI will fly to Zakynthos from July 25.
The date will also see flights resume from Bristol Airport.
A further nine destinations will be added to the TUI programme in August.
From August 1, the airline will fly to a number of Turkey destinations.
These include: Dalaman, Antalya, Izmir and Bodrum.
Additional Greek flights will be added, flying to Chania, Kefalonia, Skiathos, Santorini and Thessaloniki from the UK.
Also from August 1, flights will resume from the following UK airports: Glasgow, Newcastle, East Midlands, Doncaster, Cardiff, Stansted, Bournemouth and Exeter.
Furthermore, TUI plans to add other popular summer destinations in Portugal, Tunisia, Egypt and Morocco over the coming months.
These will come as Governments further ease travel restrictions, said the travel brand.
Andrew Flintham, Managing Director, TUI UK & Ireland said:
“Many of our customers have been waiting with eager anticipation to hear about whether they could go on holiday this summer, so we’re delighted that our first customers will depart this weekend.
“We’ve done a lot of work to ensure we can take our customers on relaxing, enjoyable and – most importantly – safe holidays again and it’s really exciting to be able to offer our customers additional peace of mind when booking with us, with our new COVID-19 Cover.
“It means that they can book with confidence, knowing that extra costs associated with COVID-19 that wouldn’t be covered by regular travel insurance, will be taken care of.”