The story of a natural disaster which played out in Bali in November 2017 exposed to many visitors stranded on the island, or those planning to visit the island - the implications to their travel insurance policies.
The volcanic eruption of Mount Agung was raised to the highest alert level and impacted tourists to the region in many ways. The airport was often closed during this period, with all flights cancelled in and out of Bali’s Ngurah Rai International Airport.
While local agencies and Indonesian government officials scrambled to put their disaster management plans into action, the prospect for international travelers to leave Bali on schedule became grimmer by the day. For many others their travel plans were thrown into disarray. Limited information was availalbe at the time for those whose visa's were nearing expiry and for those with travel insurance, many were unaware if their policies even remained valid.
Does Travel Insurance Cover Natural Disasters?
It is possible to have travel insurance coverage up to the last minute before leaving on a trip overseas however claims for losses due to natural disasters which are deemed ‘known events’ are never covered.
What Is A Known Event?
Known events may include instances when a cyclone or hurricane is named, when a volcano eruption begins - which for those currently in Bali began in mid-September. It was during this period that insurers excluded this particular known event from their coverage – as it then became a ‘known’ event. One of the features of insurance is that is covers events that have not yet occurred which are likely to cause serious harm or financial loss if they do occur. It is with this in mind that consumers purchase insurance for their home and contents, motor vehicles and travel. The important thing to understand is that not all disasters are included in each and every travel insurance plan as a description of their coverage.
By definition, a natural disaster is defined in travel insurance terms in most policies as:
‘a flood, hurricane, fire, tornado, cyclone, earthquake, volcanic eruption, avalanche or blizzard, that is due to natural causes’.
Some travel insurance policies may specifically exclude events such as a ‘volcanic eruption’ classifying them in the more vaguer terminology of ‘acts of God’. Insurance companies calculate and assess their level of risk regularly, and consider such things as the geographical location, environment and historical events in the region.
Travel Insurance Coverage For Natural Disasters
Using the Bali Volcano experience as an example, with most insurers if you purchased a travel insurance policy for Bali prior to the 16th September, 2017 then coverage for this particular natural disaster is given.
For those currently travelling who purchased travel insurance prior to this date:
If you started your journey and your transport was delayed or cancelled or your accommodation was affected due to Mt. Agung volcanic activity, there may be provision to claim for reasonable additional travel, accommodation and meal expenses. Limits, conditions and exclusions may apply under the policy and policy holders should obtain the full details by referring to the Product Disclosure Statement (PDS) and Certificate of Insurance received when the travel insurance policy was purchased. If the policy holder has not yet departed from their home country the policy likely includes cover for cancellation of the journey, or the unused portions of the journey as a result of Mt. Agung volcanic activity.
For those who have not yet departed and purchased travel insurance prior to this date:
If pre-booked travel arrangements were cancelled, delayed or rescheduled as a result of the Mt. Agung volcanic activity and the policy holder/s still remained in their home country, policy holders may have been able toclaim for cancellation or rearrangement of their journey (whichever is the lesser). It was recommended policy holders contact their travel agent or travel provider regarding the best option for altering the scheduled trip. Some travel providers may issue travellers with a range of penalty free options to amend travel arrangements.
Claims Information For Travellers Already In Bali:
If you knew your claim would be covered by your policy those insured under the policy must take all reasonable steps to reduce the cost of the claim and provide all supporting documentation of the event and expenses incurred.
For Policy Holders Without Cover For Natural Disasters:
If you were unfortunate enough to take out travel insurance cover after the cut off period, then your policy does not cover claims for losses caused by an event that you were aware of at the time of purchasing your policy. Insurance companies expect travellers to have an awareness of their intended travel destination and as such it is assumed as a policy holder without natural disaster coverage, you have made a calculated decision to travel to the destination regardless. So in these instances insurers will not, to the extent permitted by law, pay any claim caused by or arising from, or in any way connected with the Mt Agung volcanic ash cloud. Further, travel insurance policies (or any other insurance policy for that matter) do not cover claims for losses caused by something that you were aware of at the time of purchasing your policy.
What Are The Next Steps To Take If You Are Stuck In Bali During A Volcanic Event?
Travellers should take all reasonable steps to minimize their expenses while they remain in Bali during an eruption. This may include such things as rearranging the journey where possible. By 'reasonable', this generally means taking appropriate and consistent measures. For example, if you are looking for alternative travel arrangements from Bali, you should attempt to book the same fare class as your original arrangement. Each and every claim is assessed individually under the terms and conditions of your travel insurance policy so be mindful there will come a time when your expenditure will have to be substantiated.
If you are claiming cancellation or additional expenses you will need to submit all documents showing what your original planned pre-paid arrangements were, along with any receipts and documents showing your new arrangements, and advice from the travel provider indicating the non-refundable portion of the journey. Any compensation and/or refunds received by third parties such as airlines or for transport, food or accommodation will be deducted from any settlement if your subsequent claim is accepted.
Check Your Credit Card Coverage
A number of credit card companies offer blanket travel insurance cover, which means you may be covered and not know it. Many offer trip cancellation coverage, and although it may not cover all your losses, its better than nothing at all.