A potential volcanic eruption in your destination should deter you from traveling there out of fear of losing your life or facing severe travel delays at the very least. Even if you were to be safe from the magma overflow, volcanic ash alone can also severely disrupt your air travel. As recently as 2010, for example, a volcanic eruption in Iceland caused enormous disruption to air travel across Europe for at least a week. Given this, it’s not surprising that the Ministry of Foreign Affairs of Singapore issued a travel warning on 23 September 2017, advising Singaporeans to defer their travel to Bali due to the possible eruption of Mount Agung. If you have to cancel your travel plans because of Mount Agung, would you be able to ask for a refund?

Your flights will likely be rescheduled or refunded by the airline

Good news is that most airlines will be quite accommodating in response to the travel warnings. For instance, Singapore Airlines and Silk Air have already announced that customers traveling to Bali until Oct 2 that purchased their tickets on or before Sept 22 could rebook or request a refund. Other airlines like Scoot (and Tiger Air), Qantas, Jetstar, and Virgin have also announced that they will assist passengers to reschedule their flights without imposing additional fees, subject to availability and fare difference. While some like Air Asia have yet to announce anything similar, most airlines are expected to follow suit.

Other bookings won’t be as accommodating

Unfortunately, your accommodation and tour bookings won’t be as easy to recover. Since each hotel, activity vendors and travel agencies have their own unique policies, they will most likely not refund your money even if you have to cancel your trip to avoid the impending volcanic eruption. Even if they were to allow you to reschedule your bookings, however, the hotel properties might be inaccessible due to damages to the building or its surroundings.

Would travel insurance have helped?

When your travel plans have to be altered or canceled because of unforeseen volcanic activities, would purchasing a travel insurance policy have reimbursed for your lost travel bookings? Surprisingly, the answer is not an emphatic “yes.” Instead, it really depends on which insurance company’s policy you purchased.

As far as we’ve seen, FWD, Hong Leong Assurance and Budget Direct are few of the major insurance companies in Singapore that will reimburse you for cancellations due to travel warnings from the government. In contrast, many other insurers will specify that their trip cancellation benefit is “only claimable upon the occurrence” of certain insured events. This means that the natural disaster should actually occur before you can safely cancel your travel bookings and claim reimbursement from your insurance policy and that cancellations due to travel warnings don’t qualify for reimbursement.

*Screenshot of HLAS (left) and FWD’s (right) travel insurance policy document
This is why it’s so important for you to read the insurance company’s policy wording documents like the ones above before purchasing travel insurance. By doing so, you can make sure that you can actually claim for reimbursements in case certain events that can potentially be a factor in your trip actually occur. As long as you are careful to purchase a policy that is appropriate for your destination and planned activities, you can actually save a lot of money and pain when unfortunate events alter your travel plans. For instance, a policy from one of the three named insurers above could have not only reimburse you for your hotel and activity reservations in Bali, but it could have also allowed you to cancel your flights instead of merely “rescheduling” to another date when you may not be able to take days off work.

Value of travel insurance

To be sure, travel insurance isn’t a must purchase for all travelers. Not only that, most travelers will rightfully feel that they don’t benefit from buying a travel insurance policy. Afterall, even mishandled bags, one of the most common travel inconveniences, only occur 6.96 times per 1,000 passengers, representing a probability of about 0.7%.

However, it’s times like these that the value of travel insurance really becomes apparent. Random, unexpected events like a volcano eruption can occur and significantly alter your travel plans. While it may not make sense to purchase a travel insurance policy for each trip you make, it may still be advisable to do so when you know your trip faces the not-so-insignificant probability of facing certain events like volcano, typhoons or injuries from sports. If you know you will be traveling during typhoon season or that you will be engaged in potentially dangerous sports activities (i.e. snowboarding), spending an extra S$20-S$30 on your trip isn’t that big of a cost to giving yourself some peace of mind.

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ValuePenguin is personal finance company based in New York. DJ is responsible for building ValuePenguin’s presence in Asia, from researching personal finance topics in the region to building relationships with financial and media institutions. He previously worked as an investment analyst at leading hedge funds in New York including Cadian Capital and Tiger Asia. His expertise is in the global technology, consumer and financial industries. He graduated from Yale University with a degree in Economics, and speaks Korean, English and Mandarin Chinese.

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