Why travel insurance often excludes war — and what affected travellers can do

A crisis that feels like it should be covered

Many people buy travel insurance for the same reason they buy any insurance: to protect themselves from major, unexpected events that can derail plans and create sudden costs. When flights are grounded, routes are closed, or travel becomes unsafe, it can quickly trigger a chain reaction of losses — cancelled hotels, hire cars, work events, tours and other bookings. In moments of widespread disruption, it is natural for travellers to assume their policy is designed for precisely this kind of scenario.

Yet large-scale international conflict can expose a hard reality in the fine print. As conflict between the United States, Israel and Iran broke out in the Middle East, thousands of travellers found their plans in disarray. Some then discovered something they had not anticipated: their travel insurance policy explicitly excluded cover for impacts linked to war.

This has left many people facing bills for cancelled or disrupted plans and asking difficult questions. Is it fair that a policy designed to cover the unknown can exclude an event that is both major and unforeseen for the individual traveller? And if a traveller is affected, what practical options are available?

How insurance works — and why exclusions exist

Insurance is often described as a way to transfer risk. Instead of one person bearing the full cost of something going wrong, many policyholders pay premiums into a pool. Losses are then spread across that pool when claims arise.

Insurers are willing to take on risks because they estimate, as carefully as they can, how many people will claim and how much those claims will cost, compared with how many people will pay for cover but never need to use it. Put simply, policyholders buy insurance because they believe they might need it; insurers sell it because they believe enough customers will not.

Even so, virtually all insurance policies contain exclusions — specific events or circumstances that are written into the contract as not covered. In travel insurance, exclusions for war are common. The presence of these clauses can be jarring when the event causing disruption is precisely the kind that feels outside a traveller’s control.

From an insurer’s perspective, exclusions are one way to limit exposure to losses that may be difficult to price, unusually widespread, or capable of generating a surge of claims at the same time. For consumers, however, the question becomes whether the balance of rights and obligations in the contract is reasonable — especially when the contract is not negotiable.

Why war and conflict exclusions are so common

War exclusions are not unusual or rare. They are “well established and highly standard across the industry”, meaning many travellers will encounter similar wording across different policies. This standardisation matters because it affects how much choice consumers realistically have: even if you shop around, you may find the same broad carve-outs repeated in slightly different language.

These terms can also be confronting because large-scale conflict affecting an entire region has not been something Australian travellers have had to grapple with frequently in recent times. That can make it easier for people to overlook the possibility that a major geopolitical event could disrupt flights and bookings, while also being excluded from cover.

For Australians stranded in, or unable to travel through, the Middle East, another challenge is uncertainty. When disruption is linked to a conflict, it can be almost impossible to predict how long it will last or how far the knock-on effects will extend.

Are war exclusions “unfair” under Australian law?

The fairness of war exclusions is not just a moral question; it can also raise legal issues. Under the Australian Securities and Investments Commission (ASIC) Act, a contract term may be “unfair” if it meets certain criteria. One example raised in discussions of unfairness is where a contract allows one party to avoid or limit responsibility, but the other party cannot.

There is also the concept of unconscionable conduct. This concerns whether a company has exploited a consumer’s “special disadvantage” for financial gain.

On the surface, a war exclusion can look one-sided: the insurer can avoid or limit liability for a claim linked to war, while the consumer cannot avoid their own losses. That imbalance is part of what fuels frustration when travellers discover these clauses only after disruption hits.

However, applying the law to a particular policy is not straightforward. There are complex questions about how terms such as “war” should be defined and whether a particular conflict qualifies. The wording of the policy matters, as does the specific cause of the loss being claimed.

A key legal change — but limited immediate relief

Until 2021, consumer insurance contracts were carved out of the “unfair contract terms” protections in the ASIC Act. That has changed: these contracts are now covered. In principle, this means a court or tribunal could rule that a particular term in an insurance contract is unfair and therefore void it in the contract.

For travellers affected by the current chaos, though, relying on this pathway may offer limited immediate comfort. Most travel insurance is purchased under “standard form contracts” — agreements prepared by the insurer that are not subject to negotiation by the customer. War and conflict exclusions are not only common; they are deeply embedded across the market. That makes it harder, in practical terms, for an individual traveller to challenge a term quickly enough to solve an urgent problem like a cancelled trip or a stranded itinerary.

That said, if disruption is prolonged and severe, the issue could attract broader legal attention. It has been noted that class actions could emerge if the impacts are significant enough and the legal arguments gain momentum.

What to do if your travel plans are affected

If your travel plans have been disrupted and you are concerned your policy may not respond because of a war exclusion, there are still steps you can take. Some are practical and time-sensitive, particularly where flights are involved.

• Do not cancel your flight without speaking to your airline. If you are booked to travel through the affected region, cancelling independently may limit or void your access to compensation under Australian Consumer Law. Airlines may also be implementing their own refund and rebooking schemes, which you could lose access to if you cancel too soon or in the wrong way.

• Contact your insurer to clarify what is and isn’t covered. If you are unsure how your policy applies, ask direct questions about your circumstances. The answer may depend on the wording of your policy and the reason for cancellation or delay.

• Seek independent legal advice if needed. If you believe you have been treated unfairly, or if the policy wording is unclear, independent advice can help you understand your options. Community legal services may be able to provide general advice for free.

• Make a formal complaint if you think the product has been administered unfairly. You can contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678 or via its website. AFCA can make a decision to uphold or reject a consumer’s claim.

• Consider a small claims tribunal. Another option is contacting the relevant small claims tribunal in your state or territory, depending on the nature and size of the dispute.

• Check official travel advice. The Australian government’s Smartraveller website provides up-to-date travel advice for Australians, which can help you make informed decisions about whether to proceed, delay, or reroute travel.

Why the “fine print” debate keeps returning

It is easy to say consumers should read the fine print. In reality, travel insurance is often purchased quickly — sometimes as a last-minute add-on — and policy wording can be dense. When exclusions are widespread and standardised, even diligent consumers may struggle to find a policy that offers meaningfully different protection for conflict-related disruption.

This is what makes the fairness debate persistent. Insurance is marketed as protection against uncertainty, yet exclusions can remove cover for some of the most disruptive scenarios. When thousands of people are affected at once, the gap between consumer expectations and contractual reality becomes highly visible.

Understanding the limits — and protecting yourself where you can

For now, the most practical approach for travellers is to focus on the steps within their control: avoid cancelling flights without advice from the airline, confirm what your insurer will do in your specific circumstances, and use established complaint and dispute-resolution pathways where appropriate.

War exclusions may be common, but that does not mean travellers are powerless. Airline refund and rebooking schemes, Australian Consumer Law considerations, and formal dispute mechanisms can all play a role in reducing losses — even when an insurance policy does not respond in the way a traveller expected.

In a period of fast-moving international events and unpredictable disruption, the best outcomes often come from acting early, documenting communications, and getting clear guidance before making irreversible decisions such as cancelling flights or abandoning bookings.