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The 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 http://www.smartraveller.gov.au/travel-insurance-ios.pdf
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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