Travel Insurance: Does It Cover Terrorist Attacks?

Statistically speaking, the chances of being caught up in a terror-related incident during your travels is very low. Still, keep yourself covered by checking your travel insurance plan.

Holidays abroad creates priceless memories, but complications can arise during unforeseen events. We're well aware of common travel mishaps like flight delays or lost luggage. But "lone wolf" and terror-related incidents can also impact your best planned holiday - from flight delays, cancelled bookings, to loss of possessions and even injury or loss of life.  Although recent incidents of terrorism reported in the news are alarming, statistically, the chances of suffering an attack is very low.

There are several steps Singaporeans can take to help allay the impact of terrorist attacks during your holiday. You should: 

Step 1: Check insurance coverage you already have

Step 2: Increase coverage if necessary, especially if you're going to a "hot spot"

Step 3: Be familiar with emergency hotline numbers, such as credit card concierge or insurance hotlines

Step 4: Compare credit cards with travel insurance, or standalone travel insurance plans; this avoids insufficient or inappropriate coverage

Step 5: Be flexible with travel plans, so as to accommodate changes if necessary

Let’s take a deeper look at how to avoid taking a financial hit during a terror-related incident.

If you decide to cancel your holiday

A common response to a terrorist incident is to delay or cancel a trip. This means changing or cancelling hotel room bookings, flights, car rentals and other related bookings.

Before making any bookings, familiarise yourself with the cancellation policy of each. Check to see if refunds will be provided for cancellations arising from terrorist acts. If refunds are available, you can recover the cost of their tickets.

If refunds are not possible, try changing dates of your hotel and flight bookings. You may need to monitor the situation in your destination to determine when it will be safe again to travel. Be aware there may be fees involved. If such fees equal or exceed the cost of your original booking, cancelling the entire trip may be worth it.

Another option for recourse is your travel insurance. Some plans offer compensation in the case of cancelled or missed flights, as well as cancellations of travel plans. Check for exclusions that might disqualify your claim. For example, your plan may only offer a payout if the flight is cancelled by the airline, or if the insured is unable to travel because of sickness.

Remember that some credit cards provide free travel insurance. Be sure to check what coverage is provided by your credit card, and beef it up with a stand-alone travel insurance plan if necessary.

If you need to leave affected country

Should the city you're in is hit by a terrorist attack, you may feel compelled to cut short your holiday. In this case, you will face many problems similar to those described above.

Once again, the major considerations are whether you can get refunds. This will vary from merchant to merchant. Some may be able to provide refunds in the case of terrorist acts.

Here, too, your travel insurance plan may provide compensation to offset your financial losses.

Some travel insurance plans also provide emergency assistance to policyholders. You can access this through a dedicated hotline. This hotline covers a range of useful services, such as referral to medical services, interpreters, embassies and legal firms.

Similarly, credit card issuers also provide a 24-hour hotline that provide basic emergency assistance up to full-fledged concierge services.

Credit card concierge services are particularly useful should you need to change your travel plans. They can help you secure alternative accommodation (in case you need to move to a different hotel) or the next flight out of the country. They will also be able to refer to you medical, legal and police services, as well as contact your embassy on your behalf.

If you decide to go ahead with your travel plan, or get caught in the attack

Double check your travel insurance plan and find out what happens if you fall victim to an attack. Determine an appropriate level of coverage for you and people travelling with you. This will vary according to your life stage, number of dependents and other unique and personal factors.

Then check to see if your current insurance plans (whether your life insurance plan, credit card travel insurance plan, or standalone travel insurance plan) are sufficient to provide this. Most importantly, check whether this coverage still stands in the event of a terror attack. Do note that some forms of attack (such as nuclear, biological or chemical attacks) are excluded.

Broadly, there are 3 areas of coverage you should focus on: 

1. Death, total and permanent disability

This benefit pays out in the case of death or severe injury. It is designed to replace lost earnings, or prevent the disruption of future livelihood of the insured and their dependents.

2. Emergency medical treatment

This covers the cost of hospital fees and emergency services, such as ambulance, emergency stabilisation and treatment, etc.

3. Emergency evacuation and repatriation of remains

This covers any costs incurred for emergency or medical evacuation back to your home country for treatment, or in the case of death, professional services to return mortal remains for proper burial

The above is just a brief summary. Consider speaking with a trained financial adviser to help you determine your needs, interpret your policies and secure the appropriate insurance you need.

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By Alevin Chan

A Certified Financial Planner with a curiosity about what makes people tick, Alevin's mission is to help readers understand the psychology of money. He's also on an ongoing quest to optimize happiness and enjoyment in his life.