Best travel insurance policies for places prone to natural disasters (2022)

When it comes to natural disasters, Singapore is the seventh least affected country in the world, as reported by Statista in 2022. So on this sheltered island, it can be easy for us to feel detached from earthquakes, tsunamis and cyclones.

But it's a different reality for many of our Asian neighbours, such as China, which lies where the Eurasian, Pacific, and Indian Ocean plates meet — a region with high tectonic activity.

Between 1990 to 2022, Statista reports that China recorded 182 earthquakes, the highest number in the world. According to the Global Facility for Disaster Reduction and Recovery, the earthquakes that hit China account for one third of destructive continental earthquakes globally.

If you're travelling to earthquake-prone places like Japan and Bali, you want to make sure your travel insurance policy covers you in the event that your trip gets affected by natural disasters. Here's what you need to know.

1. Best travel insurance for natural disasters

You won't see a separate category for natural disaster coverage in travel insurance policies. Instead, insurers count natural disasters as one of several factors that may cause a trip cancellation, postponement, delay, or curtailment.

Let's assume you're going on a week-long trip to an Asean country. Here's a summary of the non-discounted costs and coverage of different travel insurance for trip disruptions and inconveniences due to national disasters.

2. How do I choose the best travel insurance for an area prone to natural disasters?

Before you buy your travel insurance, you need to do research on the following:

1. What kinds of natural disasters that area is prone to
2. How your travel insurance policy defines natural disasters  

The first question to ask is what kinds of natural disasters the place you're visiting is prone to, if any. For example, is the area near an active volcano that might lead to a volcanic eruption? Does it sit on the Pacific Ring of Fire, where 90 per cent of the world's earthquakes take place?

At this point, also look out for disaster warning announcements — if you're forewarned that a natural disaster may occur but still go on the trip, you won't be able to make insurance claims.

Additionally, don't forget about natural disasters that you don't hear about as often, such as hail, ice storms, landslides, heat waves, and wildfires. These are important to consider because not everyone may consider them natural disasters — including your insurers.

Once you know what natural disasters your destination area is prone to, check if your travel insurance policy defines them as natural disasters. Some insurers may limit their claims to trip disruptions due to specific disasters such as typhoons, earthquakes and tsunamis.

If you have to cancel your trip due to a heat wave but your insurance policy doesn't consider that a natural disaster, your claims won't be approved.

A good rule of thumb is to choose a travel insurance policy with a broad definition of natural disaster. Don't assume this is always the case, especially if you're buying travel insurance from an airline.

3. What are some things that travel insurers might exclude?

Travel insurers generally define natural disasters as any event or force of nature which has catastrophic consequences on the environment, finances or human life.

Most types of natural disasters such as earthquakes, volcanic eruptions, floods, typhoons, tsunamis, hurricanes and so on can fall under this category if they are serious enough. If you feel light tremors causing no damage, you're unlikely to be able to make a claim.

Do note, however, that many insurers have exclusions on nuclear risks and exposure to nuclear radiation, even if this was caused by a natural disaster. For example, the Tohoku earthquake in 2011 caused the meltdown of three nuclear reactors, leading to the Fukushima nuclear disaster. Insurance would cover you for the earthquake, but may not cover you for the nuclear disaster.

The most important thing to note is that most insurers will not cover you if you already knew about the natural disaster risk in the area, but decided to book the trip or buy the travel insurance policy anyway. 

So let's say you have already read in the news that a volcano is about to erupt in a certain destination, and you go ahead and book a trip there anyway. If you end up having to cancel your trip because the volcano erupted, you are unlikely to get reimbursed for your travel expenses.

4. How do I make a travel insurance claim if a natural disaster strikes?

Recall that insurance policies don't have a claim category for natural disasters. Instead, you'll usually have to make a claim under one of the following: 

• Travel cancellation: You are unable to depart to go on your trip due to unavoidable, unforeseen circumstances.
• Travel postponement: You already booked your trip, but are forced to change your travel dates and book another ticket for a later date.
• Travel delay: You end up departing for your trip at a later time than scheduled, e.g. due to a delayed flight. Insurers stipulate the exact number of hours that count as a delay — usually six hours. Note: Don't mix travel (i.e. flight) delay up with baggage delay!
• Trip curtailment/shortening: You are already on your trip, and have to cut it short due to an unexpected event that happened during the trip.

What kinds of expenses can be claimed under the categories above? Typically, a travel insurance policy should pay for additional travel and accommodation expenses incurred should your trip be disrupted due to a natural disaster in the country you're in or travelling to.

If a natural disaster does occur while you're travelling (choy!), contact your insurer as soon as possible, and preferably before incurring additional expenses like hotel bookings. They will advise you on the documentation you need to provide in order to make a claim, which might include receipts or police reports.

Finally, this has nothing to do with insurance, but it's a good idea to call the Singapore Embassy in the country you're in and ask for emergency contacts in case you need urgent consular assistance. You should also eRegister your overseas travel with the MFA so they can search for you if you go missing in any natural disaster (choy!).

5. Is it safe to travel to areas prone to natural disasters?

As we mentioned earlier, your insurance claims won't be approved if you were forewarned about a natural disaster risk but chose to go on your trip anyway. So in this case, if you haven't booked your tickets yet, you probably shouldn't. But what if you've already booked your flight? Is it safe to go on your trip? Will you be refunded if flights are cancelled?

That was exactly what happened in October 2017, when it was announced that Mt Agung in Bali was expected to erupt for over a month.After the last eruption in 1963 killed over 1,100 people, everyone in 2017 who booked a ticket to Bali was left wondering: Will I get killed if Mt Agung erupts again? Should I still travel to Bali? If so, what can I do to protect my safety?

If a disaster warning surfaces after you've booked your tickets, here's what you need to know:

• It's generally safe to travel to another area in that country far from the disaster threat. In the case of Mt Agung,  there are tourist spots in Bali far away enough to not be affected by the volcano. So if you don't have plans to travel anywhere near the Bali volcano, you can still go ahead with your travel plans. Furthermore, the authorities will clear out people in the danger zone, and will put up red alert exclusion zones where the lava and ash may potentially reach. So, if you're ever stumbling too near the danger zone, you'll definitely know.
• Flights will be cancelled and rescheduled by your airline. If the situation gets bad, your airline will cancel their flights to destinations near where the natural disaster is expected to occur. Flights booked that are deemed unsafe to proceed  will likely be rescheduled without any additional fees. Of course, this is subjected to availability and fare differences. Alternatively, some airlines may also allow refunds.
• Airports will be closed if the natural disaster occurs nearby. In the case of Mt. Agung in Bali, the volcano erupted on Nov 26, 2017, leading to the closure of the Ngurah Rai International Airport because of the ash cloud. While ideally you'd be ferried to other airports in neighbouring islands to take your flight out, there's also the chance that a widespread eruption might affect road travel and neighbouring airports too. If the eruption warning came when you were already in Bali, your insurance will cover your expenses while you're stranded.

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This article was first published in MoneySmart.