, December 2008
In the wake of the terrorist attack in Mumbai and the civil unrest in Thailand which shut down Bangkok's international airport, it's worth acknowledging that most travel insurance companies do not offer cover for such events.
The key reason for this is that the underwriters to the policy cannot price the risk and therefore the insurance companies generally do not officially offer cover in their policies. So if you go to the exclusions on any travel insurance policy you will almost certainly see terrorism listed.
There will be variations in the wording of the policies but generally it will still boil down to the same thing — no cover for acts of terrorism or civil unrest.
According to the Australian Securities and Investments Commission insurance policy definitions of terrorism may include many acts, which could simply be described as "a violent act or a threat of violence used by a person or an organisation to promote their cause or beliefs".
However, all is not lost. For many insurers, they will still meet claims even though it is not itemised in the policy. And the reason for this is that they don't want to damage their reputation.
After all, a well-known insurer would hardly want to be seen looking the bad guy when an Australian citizen has been the victim of a terrorist attack.
As a consequence most will come to the party and this is particularly the case if you have been injured. It just takes one of the insurance companies to cover compensation for the rest of them all to fall into line.
However, because it is highly likely that terrorism will be listed as an exclusion, you still need to be mindful that there is no guarantee you will be bailed out.
In the aftermath of the recent troubles in Thailand, where several hundred Australians were stranded while the airport was closed for the best part of a week, many travellers discovered they were not covered for the cost of their extended accommodation requirements.
The uproar that followed meant that many insurers ended up coming to the party. Cover-More , for instance, advised its policyholders to utilise the Thai Government's offer of $85 a night compensation and then to try and minimise any costs if they had to pay more for accommodation. As a result any thoughts of upgrading the quality of your hotel were seriously dashed.
James Merchant, executive manager of operational services at insurance group AAMI said that while the civil unrest that took place in Thailand was excluded in many polices "most insurers took the decision to pay".
The events in Mumbai and Thailand underline the importance of being able to contact your insurer 24/7 to advise them of your plight.
If you had booked a holiday in Thailand ahead of the unrest, then most insurers will cover you should you wish to amend or cancel your booking but you will need to check with your individual insurance company.
Indeed, according to Merchant, about 25 percent of travel insurance claims occur before the holiday has actually been taken for reasons other than terrorism and civil unrest.
When it comes to travel insurance, it is always important to check just what it is your insurer is offering. It's too late when you need to make a claim only to discover that you were either not insured for the particular event or that your cover was minimal.
Merchant cites as an example where many insurers, although not AAMI, depreciate the cost of your luggage if you are making a claim when it is lost or stolen.
"By the time you have paid your excess and then depreciated your asset, it's hardly worth claiming," he says.
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