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Hazards of travel insurance

Travel agents must recommend that their clients take out travel insurance. They point out the hazards to personal safety and to baggage in travel, and how travel insurance can cover those risks.

But what if the travel is to high-risk countries or regions? Must the travel agent point out the hazard that travel insurance does not cover that travel?

The areas concerned, constituting a “black hole” in travel insurance coverage, are those counties or regions for which the Department of Foreign Affairs and Trade (DFAT) has posted current high-level travel advisories.

Travel advisories are arranged in five categories, in ascending levels of severity. Indonesia overall is currently rated at level 4 (“reconsider your need to travel”) with Maluku and Central Sulawesi Province at level 5, the highest level (“do not travel”).

Bali is a classic case. DFAT’s advice is that potential travellers should “reconsider” their need to travel to Indonesia, including Bali, “due to the very high threat of terrorist attack”.

DFAT also advises all travellers to “organise comprehensive travel insurance and check what circumstances and activities are not covered by your policy.”

“Travel agents should recommend a policy but should point out to their clients that at present travel insurance would not cover your trip to Bali,” says specialist travel lawyer Anthony Cordato. “The reason is that travel insurance cover excludes travel to countries and regions where Government advisories and warnings against travel apply. This is a separate exclusion to acts of terrorism, which applies worldwide.”

Lack of insurance coverage would leave a traveller exposed to the full cost of any medical and hospital expenses, medical evacuation, financial loss (including cancellation and trip disruption), accidental death or total permanent disability whilst they were in the country or region in question.

Cordato says agents must not only advise the advisory at the time of booking, but should also keep their clients up to date about any changes to the status of advisories issued by DFAT or advise their clients how to keep up to date. These advisories change frequently.

Travel insurance is becoming a minefield for agents, with DFAT advisories affecting not only the client during travel, but also pre travel. If a travel advisory is upgraded to a high-level, that is, “reconsider travel” or “do not travel” before the travel commences, then the client is entitled to cancel the travel and be reimbursed cancellation charges under the travel cancellation provisions of travel insurance.

Legal determinations relating to DFAT advisories and cancellation claims indicate that travel agents may be liable to compensate travellers for the cost of cancellation or amending the travel to another, safer, destination, if they fail to (a) recommend travel insurance, and (b) advise the DFAT advisory at the time of booking. There are no determinations yet on claims by clients against travel agents where the client has travelled to a high level advisory country or region on the misunderstanding that they had travel insurance coverage.

Cordato says that one smart idea for agents is to provide their clients with the “Start Holiday” brochure, a guide to travel insurance published by the Insurance Ombudsman Service (IOS). The brochure, supported by Australia’s four major travel insurance underwriters, can be downloaded as a PDF file on

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Note: this was the first in a series of five interviews in which specialist tourism lawyer Anthony Cordato discusses issues of vital importance to travel agents.

Published with the kind permission of e-travel blackboard, where the article was first published in August 2007, and with the kind permission of Peter Needham.

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