Why it pays to buy travel insurance in an unpredictable world
According to a report from The Economist in August 2017, the number of natural disasters worldwide has more than quadrupled since 1970 to around 400 a year. 2018 alone has seen the following large-scale natural disasters:
An earthquake and tsunami in Sulawesi, Indonesia
Hurricanes Michael and Florence in the US
Super typhoon Mangkhut in the Philippines
An earthquake in Papua New Guinea
Tropical storm Lane in Hawaii
Mount Fuego erupting in Guatemala
Wildfires in California
Flooding and mudslides in Japan
Dust storms in India
These events shouldn’t mean that people stop travelling, but it does show that taking comprehensive travel insurance is more important now than ever before.
With three Bali villa rentals, we were just one of many groups of people who, in 2017, experienced the impact of Mount Agung’s threatened eruption first-hand. The local Balinese who needed to be evacuated from their homes for months on end were undoubtedly the hardest hit. However widespread cancellation of travel led to tourists, airlines, accommodation owners and tourist service providers also being hit hard.
We have always advised our guests to take travel insurance, for a good number of reasons, but the time seems right to focus on travel insurance coverage for natural disasters, and why it might be the best investment you make for your holiday – not only for Bali, but anywhere in the world. Natural disasters often have widespread, unforeseen consequences - such as the volcano eruption in Iceland in 2010 that affected flight schedules throughout Europe.
It pays to take comprehensive cover (which is normally the only one that will cover natural disasters) and, as boring as it is, it pays to read the small print! Because, while a natural disaster is typically defined by travel insurance plans as “a flood, fire, hurricane, tornado, earthquake, volcanic eruption, blizzard, or avalanche that is due to natural causes” not all of them are included in every plan’s coverage.
Many credit card companies and banks provide free cover if you purchase your air tickets on your credit card, but that is normally a very limited package. To get comprehensive cover you’ll need to buy a “top-up” package.
When will insurance not pay out for natural disasters?
Choosing not to travel: Simply deciding not to go because of the possible threat of a natural disaster is not going to cut it with your insurance company. They will pay out only if your destination is classed as “uninhabitable” or if your travel arrangements need to be “significantly delayed”. Equally your accommodation provider is under no obligation to waive their cancellation policy, or change your dates, because of a natural disaster – that is what your travel insurance should be in place for.
Claiming for known events: It pays to buy your insurance early. If you buy it just before you depart you run the risk of a natural disaster becoming a “known event” – which can happen very quickly! Events become known, or foreseen, when they are acknowledged: a snow storm is forecast, a hurricane is named, or a volcano is declared as being likely to erupt. You need to buy your insurance before this cut-off date because claims for known events are never covered.
Ignoring travel warnings: Insurance companies don’t like reckless behaviour so, if you go against a travel warning, particularly one issued by a government, your cover might be invalidated.
What can you claim for?
Before departure: To reiterate, you will only be paid out by your insurance if the destination is uninhabitable or if you experience significant delays. If your airline can’t fly at the scheduled time, or can only re-book you at a time that it is considered a significant delay, your insurance should pay out.
During and after your holiday: If you are stranded in your holiday destination, contact your insurance company as soon as you are affected to find out what will be covered, and how you should claim for any additional unforeseen expenses. Keep a record of all correspondence and hold onto any receipts or evidence of additional expenses.
Every travel insurance plan varies. You will need to do some research on finding the plan that best suits your needs. The following sites can help you compare.