1 December 2019

How reliable is travel insurance? (A true story)

So, exactly how reliable is travel insurance?  Very, actually - at least most times it is. What is certain is that travel insurance has become absolutely essential these days in view of the multitude of very real risks associated with modern-day travel - from missed connections due to industrial action to contracting a flu strain while abroad to having some crazed fanatic hijack the flight you're on.

And so it was that one such misfortune should befall my wife and I in the spring of 2010.  We'd just arrived in London, England by train when we learnt of the Eyjafjallajokull volcanic eruption in Iceland the previous day and, consequentially, the potential closure of airspace over vast parts of western Europe.  At the time, we didn't for a moment think that our travel plans would in any way be affected.  After all, such things only happen to other people, right?

WRONG.  Three days later, we were unceremoniously informed by Singapore Airlines by text message that our flight home has been cancelled indefinitely.  Concerned but unafraid, we took comfort in the knowledge that our predicament was covered by the travel insurance we'd taken from Allianz for this trip.  In any case, this was a straight-forward case of flight cancellation due to hazardous weather conditions. Or so we thought.

CLICK HERE to learn more about the Eyjafjallajokull volcanic eruption.

When we finally arrived home in Malaysia, we immediately lodged our insurance claim, declaring in good faith that our original flight back had been cancelled - not for a second expecting the word to become the a point of contention.  Within just two days, Allianz rejected our claim on grounds that ours was a case of flight "cancellation" (as opposed to "suspension" or "delay") which - surprise, surprise - wasn't covered by the policy.  We were in disbelief.

After two subsequent failed appeals to Allianz, we took up the matter with the Malaysian central bank's Financial Mediation Bureau (FMB) for arbitration.  This was in June 2010.  Amazingly, the dispute would drag on for three numbing years during which a dozen tripartite correspondences were exchanged.  Literally at the end of the insurance limitation period, we received the following letter from FMB which outlines their final decision with regards our grievance.

I won't go into its contents as they're pretty much self-explanatory with a clear synopsis of events.  I urge you to read the full text, however, as I feel it provides a useful life lesson.  Remember, it could happen to you.



Note how even a formal letter from Singapore Airlines explaining that the situation was effectively one of flight suspension was literally brushed off by the insurer.


So there you have it; even FMB, for all their good intentions, couldn't help. The cold, hard fact is that flight cancellation benefits are not covered under most travel insurance plans.  And this isn't unique to Malaysia; I've since learnt that "flight cancellation" is a standard exclusion almost everywhere.

Now, I'm not writing this out of spite; we respect FMB's decision.  I merely wish to share with everyone our experience and to highlight a popular (but potentially dangerous) notion that all travel insurance plans offer flight cancellation benefits as matter of course.  The sad fact is almost all DO NOT and, very often, honesty and good faith go right out the window when claims are eventually lodged.

Nonetheless, I still believe travel insurance is imperative by virtue of its many other benefits, and I certainly would not advise anybody against taking one before they board that plane.  But do learn from our experience; the next time you buy travel insurance, make sure you (a) study the plan microscopically, and (b) question its reliability under various potential scenarios.

Read the fine print and read between the lines as almost all insurance brochures come sugar-coated, highlighting only the risks and perils that are covered while leaving out those that aren't.  Hopefully no one needs to go through what my wife and I did.

Good luck and travel safe always, everyone.






Did you find what I shared here useful?  Have you ever had issues with your travel insurance?  If so, please share your experience(s) in the "Post a Comment" field below for the benefit of travellers who may be reading this blog post.  We'd all love to hear from you.

14 comments:

  1. Hi Vincent, I'm sorry to hear about your experience but I don't agree with you that a travel insurance is imperative, except for an insurance for medical emergencies. Travel insurances are overpriced and it is very hard to claim anything, I think both are due to the fact that travel insurances have to deal with a lot of false claims. Besides that, like your experience shows, when you really need it they won't help you. I'm surprised that in your case they don't even mention 'force majeure/act of god' since the ash cloud problem was something never experienced before. Also the terrorism that you mention in the beginning of your article is not covered anymore by any travel insurance since 9/11! But anyway, my advice would be to bring as little valuable things as possible on your trip, and if your camera etc. gets lost you will be able to pay it back with the money that you saved from the premium pretty quickly. Just take care of the medical insurance, because the cost of medical expenses or repatriation can soon be higher than you would be able to pay out of your own pocket.

    ReplyDelete
    Replies
    1. Hi, u didn't leave your name. Well, I did mention about force majeure and Act of God to the insurer but the gist of the problem was actually flight cancellation. Allianz didn't really want to know what caused the cancellation. Like you said, it's always difficult when it comes to such claims. It was a bit of a blow financially but a good lesson learnt nonetheless. From what you said, I take it you're from America. Fortunately, hijacking still forms part of the risks covered by insurers here in Malaysia, including travel to the USA. And travel insurance premium here is relatively cheap, which is good. Thank you very much for your sound travel tips; I'll definitely keep them in mind. Very nice of you indeed to drop a line - and a most meaningful one too.

      Delete
    2. Hi Vincent, I'm from Europe (living in Asia) and after 9/11 all European insurances issued an update of their policies in which terrorism is not covered anymore. I wasn't aware that this is not the case for Malaysia, so maybe a travel insurance is more value for money here then, especially when the premium is low. Although I don't think it is smart from Allianz to treat you like this, this was an extraordinary case. I was stuck in KL myself during the ash cloud and many of my friends and colleagues were stuck around the world, if all people that were affected had to be compensated it would have cost a fortune and the airlines were already making huge losses on this. Too bad for yourself (and me as well btw, I didn't get anythying either), especially that it has been dragging on for so long. Hope your next travels will be better!

      Delete
    3. Thank you, Lennart. Hope you had a good time in my country - ash cloud aside, that is.

      Delete
  2. Some of that unavoidable circumstances while traveling could include the necessity of canceling one's travel plans in the event of an emergency, or the loss of luggage.

    ReplyDelete
  3. This article is very informative and cool. Thanks for share this beautiful article.
    insurance.

    ReplyDelete
    Replies
    1. I'm happy you liked it, James. Thanks for the feedback.

      Delete
  4. Thanks to show me reliability of travel insurance I will be more safe in future taking travel insurance on holidays.

    ReplyDelete
    Replies
    1. Hey, Paul, the pleasure's mine. I'm glad u found this post informative.

      Delete
  5. J. McCarthy, Inverness, Scotland9 September 2014 at 15:48

    Very thoughtful and kind of you to share with us such a personal experience, Vincent. I find the article very useful indeed. To be honest, I'd always assumed that flight cancellations are covered as a matter of course. I'll need to be more wary of this next time. Thank you once again.

    ReplyDelete
    Replies
    1. Hello, Mr McCarthy. I assure you; you're not alone on that score. Little excite me more as a blogger than knowing that what I've written has touched someone. Thanks very much for popping in and leaving a line. Much appreciated.

      Delete
  6. Some of that unavoidable circumstances while traveling could include the necessity of canceling one's travel plans in the event of an emergency, or the loss of luggage. -

    ReplyDelete
  7. Thanks to show me reliability of travel insurance I will be more safe in future taking travel insurance on holidays. -

    ReplyDelete