Insurance policies may not cover Bali travellers.

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November 27, 2017
Bali volcano Atung erupt insurnance
Bali's Mount Agung in quieter times.

Passengers whose travel plans have been thrown into chaos by erupting Balinese volcano Mt Agung may be in for another shock when they try to claim on their travel insurance.

Many travel insurers cut off coverage for Mt Agung when the likelihood of an eruption spiked in September and that exemption may still be in place.

Some re-instated coverage when Indonesian authorities downgraded their warnings but  have since issued cut-off notices after the volcano began erupting last week.

“Most insurers have now imposed cover bans for Bali, so check the date you took out your policy,’’ said Bessie Hassan of comparison site finder.com.au.

“You will also need to ensure your travel insurance policy covers cancellations and trip disruptions due to natural disasters. If it’s not clear whether you do have the right level of cover, contact your insurer for clarity before you go ahead and make alternative arrangements.”

Authorities have now moved the aviation alert in Bali to its highest level, code red, and services to and from the island are hostage to whether the prevailing winds blow ash over the airport.

Australian and other carriers cancelled their services to Bali Monday after the ash cloud closed the airport at Denpasar and the Darwin Volcanic Ash Advisory Centre issued warnings about the direction and height of the ash cloud.

Major insurer Cover-More issued a statement Sunday noting that it’s original notification dated September 18 was still in effect.

“Please note that in accordance with our original notification dated 18 September, there is cover available for policies issued prior to 2:00pm on 18 September,’’ it said. “For policies issued after this time, there is no cover available as the event is not considered unforeseen.”

People with policies issued by insurers who reinstated volcano coverage when Indonesian authorities downgraded the alert are among those who will need to look closely at dates.

1Cover, for example, excluded Mt Agung from policies bought after midday AEST on November 22 and for policies bought between September 16 and November 6.

But it said cover was available for policies issued between November 6 and noon November 22 for passengers forced to change their travel plans due to volcanic activity.

Travel Insurance Direct said claims arising from volcanic activity were not available for policies bought after 8.05pm on November 21.

Cover was available for policies purchased before the cut-off for travellers forced to change their travel plans because of flight cancellations or restrictions due to volcanic activity.

“Where your trip has not yet begun, cover is available for the lesser of rearrangement or cancellation costs,’’ it said.

“Where travel has begun and you have no option but to change your travel plans, your policy covers the following benefits when they are listed under the plan you have purchased: medical expenses overseas; travel delay; cancellation costs or additional travel and/or accommodation expenses resulting directly from a provider cancelling or restricting your scheduled public transport services.”

Insurance Council of Australia general manager communications Campbell Fuller said insurance was designed to cover the unexpected.

“When the volcano starts creating trouble it goes from the unexpected to the expected or the known and that’s when insurers put in place embargoes,’’ he said. “The insurer will still sell a policy but the policy will not cover any claim related to the volcano.”

Fuller said travellers could still get travel insurance that would cover them for other issues but needed to realise they were not covered for any financial loss due to the volcano.

He said people who had taken out travel insurance before the volcanic disruptions would likely have coverage but they would still need to have suffered a financial loss.

Travel insurance also did not cover inconvenience — there had to be a financial loss — and claims were unlikely to be successful where  airlines or accommodation provided new flights or accommodation.

“If the disruption has caused them to cancel booked trips or flights elsewhere, that’s where they might have cause for a claim,’’ he said.

On the question of natural disaster coverage, Fuller said it would be a case-by-case basis that depended on policy wording. This was why travellers had to look for coverage not just for  a destination but events they wanted covered.

“And the other tip is when you book your holiday, buy your travel insurance because that travel insurance kicks in immediately and if something happens that means that you financially lose before you even leave then the policy is likely to respond,’’ he said. “People who buy their travel insurance at the last minute are going to get caught out.’’

Fuller said the first thing travellers affected by the volcano should do was contact their airline or accommodation provider and see where options were available. They should then contact their insurer to see what was available under the policy.

“But the focus here is on financial loss, not inconvenience,” he said.

Airlines have been offering vouchers and the ability to rebook to people whose flights have been cancelled. Because the event is outside the airlines’ control, they are not required to pay customers for extras such as accommodation and meals.

Jetstar, which has about 5000 customers affected so far, said passengers would be contacted and advised how to rebook. The airline has also flagged that it will allow customers to change their flights to other holiday destinations free of charge.

“If you are booked on a cancelled flight and wish to continue to travel, you should not change your booking,’’ it said

“If you do not wish to travel, you can request a voucher to the credit of you booking.”

AirAsia said affected passengers could move their flight to a new travel time on the same route within 30 calendar days of the original flight schedule or receive credit for future travel with the airline.

But it said the future credit should be redeemed within 90 calendar days of the date of issuance.

Virgin Australia said it was reviewing its commercial policy.

It was not clear whether carriers flying to Bali would follow the practice of US airlines that offered refunds to passengers affected by hurricanes earlier this year.