Travel Story Mt Agung and travel insurance: What to do next

Clouds of ashes rise from the Mount Agung volcano erupting in Karangasem, Bali, Indonesia, Tuesday, Nov. 28, 2017. Mount Agung volcano on Bali has erupted for the first time in more than half a century, forcing closure of the Indonesian tourist island's busy airport as the mountain gushes huge columns of ash that are a threat to airplanes. (AP Photo/Firdia Lisnawati)
Photo of Angie Tomlinson

The bad news is your flight to Bali has been cancelled because Mt Agung has erupted. The good news is you've bought your travel insurance before insurers slapped on exclusions when Mt Agung became a "known event".

So what do you do when your flight has been cancelled? First, don’t stress. Your airline is accountable for your flight, says Natalie Ball, director of Comparetravelinsurance.com.au.

If you’re still in Perth:

Liaise closely with your airline - You can reschedule your flight to when flights resume. Some airlines are offering refunds on Bali flights, or flights to alternative destinations like Thailand, Vietnam and even Japan. Again, don’t forget to update your travel insurance policy with the changes.

Seek refunds - Whichever you choose, contact your accommodation or any pre-paid tours in Bali and ask for a refund for any lost deposits.

Keep evidence - If they aren’t willing to refund you, you can potentially claim it against your travel insurance.

If you’re stuck in Bali:

Don’t panic. Subscribe to alerts with smarttraveller.gov.au and keep in contact with your airline for status updates and flight schedules – their social media pages are great for this.

Contact your insurer – if you have cover under your policy, your travel insurance will be extended but you should tell them about the delay as soon as possible.

Don’t splash the cash - Keep your travel expenses consistent and retain receipts for evidence. Credit card statements are a good way to demonstrate expenditure when it comes time to claim.

Mt Agung’s ongoing volcanic eruption has brought to the surface plenty of insurance myths, namely that all cancelled flights, regardless of the reason, are covered by travel insurance. That is not the case, says Ms Ball.

“In a nutshell, travel delays or cancellations where the airline is at fault are not covered, this could be anything from mechanical problems, maintenance, staff shortages or overbooking. However, disruptions outside of the airlines control such as bad weather and natural disasters are generally covered."

For cancellations outside of the airline’s control, comprehensive travel insurance will cover you. Coverage should include any pre-paid expenses if you can’t get compensation elsewhere, and depending on the policy, additional expenses such as your meals and accommodation if the delay was more than six hours.

Of course, travel insurance is for unexpected events and many insurers have had an exclusion in place for Bali-bound policies from mid-September when the eruption looked imminent.

“It’s clear to see that Aussies were panic-purchasing as soon as news of an imminent eruption hit the mainstream media. Those quick off the mark may have bought just in time before insurers made their cut-off times public,” Ms Ball says.

A handful of providers did lift the ban for a few weeks in late-October with some savvy travelers taking advantage of that window.

“If you purchased a comprehensive policy that covers natural disasters when the ban was temporarily lifted, you may be in luck,” she says.

If the ban is lifted again and you don’t already have adequate coverage, the relatively small cost of a second policy with adequate coverage could save you thousands. “Under insurance law, you can’t claim against both policies and be reimbursed for the full costs twice though!”

Buyers can also take advantage of the minimum cooling off-period (usually 14 days) insurers are required to give.

“This allows you to cancel and get a full refund on your policy. If the Mt Agung ban was lifted inside this period, you could have your old policy refunded and apply for a new one.”

So what if you just don’t want to go because Mt Agung makes you nervous or you don’t want to get stuck in Bali?

“Claims are assessed on a case-by-case basis, but it’s unlikely that you’d be covered under cancellation if your trip has not been directly affected.  You’d need to provide evidence that your trip could not go ahead and demonstrate that the cancellation was beyond your control,” says Ms Ball. There are options though to change your booking or choose a different destination through your travel provider. Make sure you amend your travel insurance policy though so it covers the holiday you are actually going on.

And for those that get stuck in Bali, don’t think you can swap your three-star hotel for a five-star with business flights. Insurers quote “reasonable” or equivalent” expenses. A credit card is a good way to demonstrate expenditure when you do claim, otherwise make sure you keep your receipts.

Top picture by AP.

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