Airline insolvencies and other surprising things not covered by travel insurance

-Lorna ThornberWhen Air Vanuatu went into voluntary liquidation last week, leaving thousands of travellers, including many Aussies, stranded, many of those affected were surprised to learn their travel insurers wouldn't cover them for resultant losses.The Australian Department of Foreign Affairs and Trade (DFAT) told anyone affected by the flight cancellations "to contact the airline, your travel agent or insurance company about rescheduling flights". However, experts warn that very few travel insurance policies cover such insolvencies.Compare Travel Insurance director Natalie Ball said most policies will have an exclusion saying there is no cover for claims that arise due to error, default or financial collapse of a travel service provider, such as an airline, travel agent or tour operator.READ MORE: Every Australian should see Uluru at least once - here's the best way to do it"Whilst insolvency of a travel provider can certainly disrupt travel plans, most insurers see it as a business financial risk, rather than a risk of travel itself."Pricing for other businesses going bust is extremely difficult, so most travel insurers opt to limit their exposure and keep their premiums more affordable for consumers. For example, small tour operators and travel agents often go into voluntary administration."MoneyHub founder Christopher Walsh said protection against airline insolvency may be offered as an optional add-on in limited circumstances, "but these are usually more expensive and come with specific terms and conditions".To be covered, you would need to have bought your policy before news broke of the affected company's financial woes.Below are several other things experts say travellers are often surprised to learn they are not covered for. In some cases, you may be able to get coverage if you opt to pay extra."Best of all, it's not as expensive as people think to insure for pre-existing conditions, adventure sports and other risks," Walsh said. "Customising a policy with add-ons to address specific needs, like insolvency of travel providers, can also help limit the risks not typically covered by standard policies".READ MORE: Scoot slashes prices with Japan fares on offer for $320Lost and damaged smartphonesThey're essential items on most holidays and often among the most expensive things we take with us but smartphones lost or damaged on a trip may not be covered by travel insurance.In fact, cracked screens are so common, insurers are increasingly restricting coverage for them."With a growing dependency on smartphones and other screen devices for constant connectivity, even when on holiday, it is no surprise that a cracked screen isn't considered unforeseen," Ball said. "Exclusions will often apply to smashed or cracked screens."In addition, single-item cover limits on standard policies may mean you are not compensated for the total cost of your phone, particularly if it's a pricey model."Many travellers see the headline benefit limit for luggage, for example, $10,000, and assume that all their belongings will be covered for their full value," Ball said. "However, most insurers have specific per item limits for things such as computers, laptops, cameras and jewellery. Travellers should pay attention to the limit caps and purchase additional cover for high-value items where appropriate."Speaking of jewellery, insurers sometimes exclude it as a high-value item, so Ball recommends either leaving expensive items at home or taking out a standalone policy for jewellery or covering it under your home and contents policy.Unattended itemsCover for lost and stolen items is one of the major benefits of travel insurance, but most travellers don't realise their belongings aren't covered when unattended, Ball said.If you have a habit of losing things, this could pose a particular problem. Items left behind at an airport or in a taxi, hire car, plane seat pocket or bathroom could all fall into this category."While such claims would be assessed on a case-by-case basis, it's important to prove you had taken reasonable care to prevent theft or loss," she said.READ MORE: Aussies weigh in on controversial resort etiquetteAlcohol and drugsMany travellers like to toast their holidays with a few drinks, but getting too out of it could jeopardise your insurance cover.Most travel insurers have an exclusion against alcohol and drugs and, while a few drinks won't necessarily void your cover, you may lose out if consumption of alcohol or drugs is found to be a contributing factor to your claim, Ball said."Some insurers, such as Cover-more, define impairment at a blood alcohol level of 0.19 per cent or above while others such as 1Cover, do not specify a blood alcohol limit."Risky sports and activitiesFor outdoorsy types and adrenaline junkies, holidays are all about indulging in activities that get the blood pumping. While most insurers cover recreational sports, activities such as trekking above 3000 metres, quad biking, open-water sailing and events such as the Running of the Bulls in Pamplona are often excluded from coverage, Ball said."Skiing is usually an optional add-on, but it may not extend to activities like back country skiing or riding a snowmobile."SCTI will not cover travellers for any competitive sport where a person can win money, or extreme sports such as BASE jumping, hunting, kite surfing, flying a microlight, motor sports, off-piste winter sports, potholing, rodeo or skydiving.Unless taking part with a licensed operator and wearing all required safety gear and following safety instructions, travellers will also not be covered for abseiling, black water rafting, bungee jumping, caving, hang gliding, land yachting, outdoor rock climbing, on-piste winter sports, parachuting, paragliding, parasailing, or white water kayaking or rafting.If you're planning an adventurous holiday, it may be worth looking to insurers who specialise in certain activities, Ball said.Passports, visas and petsIf you fail to notice your passport has expired or your visa doesn't come through on time, don't expect your travel insurer to bail you out."We won't cover a traveller if their passport is out of date, or a required visa didn't come through in time or isn't correct," McCauley said. "We also won't cover someone for any events related to an animal owned by them or a relevant person. For example, if their dog fell sick just before departure and they wanted to cancel their travel plans."This story originally appeared on Stuff and was republished with permission.