Travel plans disrupted by the war? Your insurer is unlikely to help

The closure of one of the world’s busiest regions for international airline traffic has caused massive disruption to travel plans for thousands of Australian passengers – and travel insurance is unlikely to cover the costs involved.

Both Dubai – the world’s busiest airport for international travel – and Abu Dhabi have been struck by attacks from Iran, while airspace over the United Arab Emirates, Qatar and other parts of the region is closed. The Australian government’s Smartraveller website has updated its advice for several countries in the region to its highest level: “Do not travel.“

Flying to Europe via these Middle East hubs is particularly popular for Australians, so the disruptions will be felt across the country.

Which airlines are affected?

Emirates, Etihad and Qatar Airways are the three biggest carriers affected. Virgin Australia and Qantas passengers will also be affected. The former because Virgin Australia has leased Qatar Airways planes and crew for flights via Doha, and Qantas passengers because the airline has a codeshare agreement with Emirates, so some flights booked by Qantas passengers may fly via Dubai on an Emirates plane.

I’m due to fly in the next couple of days. What should I do?

While the airlines affected are, for the most part, offering to rebook passengers at a later date or to give refunds, that doesn’t help you if you have holiday plans booked in the next few days or are trying to get home. Airlines are advising passengers to act only if they are flying imminently, but don’t be surprised to find the disruptions lasting far longer. Aside from damage to the airports of Dubai and Abu Dhabi, which may take time to repair, US President Donald Trump has suggested the attack on Iran will continue for four to five weeks.

Will travel insurance cover the costs of the disruption?

Unfortunately, travel insurance is unlikely to come to your rescue to help cover the costs of booking new flights via another route or securing accommodation while you wait for the situation to resolve (in some cases, the airlines may assist with accommodation).

War is something that comes under travel insurers’ “force majeure” clause – meaning it is, usually, explicitlycustomarily excluded from coverage in travel insurance policies.

What is force majeure?

Force majeure is an event that happens outside the control of you or your travel operator. It includes terrorist activity, war, civil unrest, industrial disputes, epidemics, natural or man-made disasters, fire, extreme weather conditions or any other event that cannot be predicted but that could disrupt your trip. Volcanoes in Iceland or Bali that halt flights and leave travellers stranded and searching desperately for hotel rooms, and wildfires that send holidaymakers fleeing from Greek Islands are force majeure events, and so is the current situation in the Middle East.

Force majeure clauses are commonly found in the terms and conditions of travel suppliers, and these clauses absolve the operator from fulfilling their contractual obligations. When you book a flight with an airline, a hotel room or sign up for a tour, you are agreeing to those T&Cs and Australian common law does not generally override force majeure clauses. According to law firm MinterEllison: “As force majeure is a product of contractual negotiations, parties have the freedom to negotiate force majeure clauses as they see fit.” In fact, there is no negotiation: the traveller accepts whatever the travel supplier sets out as a condition of their travels.

How does travel insurance deal with force majeure?

Some travel insurance policies offer limited coverage for certain categories of force majeure events, such as severe storms and natural disasters. However, most travel insurers exclude acts of war, political unrest and acts of terrorism from trip cancellation coverage. Allianz spells it out succinctly in its product disclosure statement, listing war under “Things we will never cover”, which says if “your claim arises from any act of war, whether war is declared or not, or from any rebellion, revolution, insurrection or taking of power by the military”.

So too does Cover-More, which says under the general exclusions in its product disclosure statement that it will not cover “claims arising as a result of war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power”.

The point about whether war is declared is significant because the US has not formally declared war on Iran. Only the US Congress can do this, even if President Donald Trump says otherwise.

Travel insurers also exclude claims from countries on Smartraveller’s “Do not travel” list, which currently includes the UAE, Qatar, Bahrain, Israel, Iran, Lebanon and Kuwait (but not Saudi Arabia, Jordan or Oman at this stage).

What about your tour operator?

If you’re travelling on a tour and a force majeure event happens before the trip begins, the operator may cancel the trip and offer a refund minus any unrecoverable costs. Those costs could be significant if the event happens close to the start of the trip, since hotel rooms are likely to have been paid for in full. Some will offer a travel credit, but others might have clauses in their T&Cs to the effect that they may cancel or postpone a tour at their own discretion and the traveller has no right to refunds or compensation. The operator may also decide the risk caused by the force majeure event is manageable and that therefore the tour will go ahead.