The insurance is free to visitors but will only be applied to those who did not know they had the virus.
ADVERTISEMENTHolidaymakers in Spain's Canary Islands will be eligible to have their costs covered if they become infected with coronavirus.
The regional government said on Wednesday it had taken out insurance with the Spanish branch of French insurer AXA.
It means that COVID-19 positive tourists will be eligible for free medical care, repatriation and accommodation that respect quarantine measures, according to a statement.
The islands off northwest Africa are particularly popular with British holidaymakers, who make up a third of visitors.
But Spain's tourism industry took another knock after the UK last month decided to impose a 14-day quarantine rule for all returning passengers.
The insurance is free to visitors but will only be applied to those who did not know they had the virus.
It will also only be activated for those who do not have personal insurance to cover the costs.
Spain has been one of the hardest hit countries by COVID-19, reporting over 28,000 deaths since the start of the outbreak.