The travel insurance clause that could wreck your holiday

What do the recent floods in West Sumatra, the current riots in New Caledonia and the 2023 earthquake in Morocco have in common?

They’re all force majeure events, and if you happened to be in any of those countries when trouble visits, your travel operator and your insurer might not gallop to your aid. 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 or any other event that cannot be predicted but which could disrupt your trip.

Force majeure clauses are commonly found in the terms and conditions (T&Cs) of travel operators, and these clauses absolve the operator from fulfilling their contractual obligations.

When you book a flight with an airline, book a hotel room or sign up for a tour, you agree to those T&Cs and Australian common law does not generally override force majeure clauses. Some travel insurance policies offer limited coverage for certain categories of force majeure events, such as severe storms and natural disasters.

However, most insurers exclude acts of war, political unrest and acts of terrorism in their product disclosure statement (PDS). If you’re travelling on a tour and the force majeure event happens before the trip begins, the operator may cancel the trip and offer a refund minus any unrecoverable costs.

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If you’re in the danger zone, how your travel operator responds to a force majeure event depends on how much they value your loyalty, and possibly how much you paid for your tour. Some will rely on 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.

Others will pull out all stops to remove you from the affected zone and get you somewhere safe. The operator may also decide the risk caused by the force majeure event is manageable, and therefore the tour will go ahead.

If you decide to pull out, you’re subject to whatever cancellation penalties the operator might apply according to their T&Cs.