Why travel insurance often excludes war — and what stranded travellers can do
When the event you insured against isn’t covered
Travel insurance is commonly sold as protection against the unexpected: the kind of major, unforeseen event that can throw carefully planned trips into chaos. In a week where conflict between the United States, Israel and Iran broke out in the Middle East, the disruption has been far-reaching. Flights have been grounded, travellers have been stranded, and the knock-on effects have spread quickly through the rest of a trip’s moving parts — cancelled hotels, hire cars, work events, tours and other bookings.
For many travellers, this looks like exactly the scenario travel insurance is meant to handle. Yet some people have discovered, often only after plans have already collapsed, that their policy explicitly excludes cover for impacts linked to war. Those exclusions are usually in the fine print, but the financial consequences are not small: thousands of people may now be facing bills for cancelled or disrupted travel.
This has revived a difficult question that sits at the intersection of consumer expectations, contract law and the realities of risk: is it fair for travel insurance to exclude war? And if you are affected by a conflict-related disruption, what practical options do you still have?
How insurance works — and why exclusions exist at all
At its core, insurance is designed to cover you against the unknown. It works by transferring risk from an individual to a larger group, spreading losses across many people who face similar risks. Instead of one person carrying the full cost of something going wrong, policyholders pay premiums into a pool. When covered events occur, claims are paid from that pool.
Insurers take on this risk because they estimate, as carefully as they can, how many people will make a claim and what those claims are likely to cost. The business model relies on the fact that many people will pay for cover but statistically never need to claim, while a smaller number will. In simple terms, people buy insurance because they bet they will need it; insurers sell it because they bet enough people will not.
Even though the purpose of insurance is to provide a safety net, almost all policies contain exclusions — specific situations written into the contract that the insurer will not cover. These exclusions are not unusual or incidental. They are a central part of how insurers define the boundaries of the risk they are willing to accept.
Why “war” is commonly excluded in travel insurance
In travel insurance, it is very common for contracts to exclude claims caused by war. The recent Middle East conflict has highlighted how significant this can be in practice. When a large-scale conflict affects an entire region, disruption can cascade quickly and unpredictably. For Australians stranded in, or unable to travel through, the Middle East, it is difficult to predict how long the conflict and associated disruption will last.
That uncertainty matters because travel insurance is priced and structured around estimations. A widespread event affecting large numbers of policyholders at once can challenge those assumptions. Exclusions, including those related to war and conflict, are one way policies draw a line around what the insurer will and will not absorb.
However, the existence of a common industry practice does not automatically resolve the question consumers ask when they discover the exclusion at the worst possible time: is it fair that a policy sold as protection against travel chaos does not respond when the chaos is triggered by war?
The fairness question: what Australian law looks at
When consumers question whether a contract term is fair, Australian law provides some concepts that can be relevant. Under the Australian Securities and Investments Commission (ASIC) Act, contract terms may be considered “unfair” in certain circumstances. One example of unfairness is where a contract allows one party to avoid or limit their responsibility, but the other party cannot.
There is also the concept of unconscionable conduct — broadly, where a company exploits a consumer’s “special disadvantage” for financial gain. These are not casual labels; they are legal standards that can be tested in disputes.
So where does a war exclusion sit in this framework? One argument is that the insurer can avoid or limit liability to pay a claim, while the consumer cannot avoid their losses. That imbalance can feel stark when disruption is widespread and expensive.
At the same time, these issues are not straightforward. There are complex questions about how a term like “war” is defined and whether a particular conflict qualifies. The way a policy defines war, conflict, or related terms can matter, as can the facts of the event that caused the loss.
Unfair contract terms and insurance: what changed in 2021
Until 2021, consumer insurance contracts were carved out of a key consumer protection in the ASIC Act — the unfair contract terms law. That position has changed. Consumer insurance contracts are now covered, meaning a court or tribunal can rule that a particular term is unfair and therefore void in the contract.
In theory, this creates a pathway for consumers to challenge problematic terms. In practice, travellers affected by the current disruption may find this avenue difficult to rely on for immediate relief. Travel insurance policies are typically purchased as “standard form contracts”: contracts prepared by one party (the insurer) and not subject to negotiation by the other (the customer). War and conflict exclusions are well established and highly standard across the industry.
That standardisation can cut both ways. On one hand, it may reinforce the idea that consumers have limited ability to negotiate or avoid such terms. On the other, it also reflects that these exclusions are not unusual one-off clauses but deeply embedded features of how travel insurance is commonly written.
If disruption is prolonged and severe, the issue may attract broader legal attention. It has been suggested that class actions could emerge, depending on how events unfold and how consumers are affected. But legal processes take time, and they do not necessarily solve the immediate problem of what to do when your flight is disrupted and your insurer points to an exclusion.
What to do if your travel plans are disrupted by conflict
If your travel plans have been affected by conflict in the Middle East and you are concerned your travel insurance will not cover you, there are still practical steps you can take. These steps are especially important because decisions made in the middle of disruption — such as cancelling a flight independently — can have flow-on effects for refunds, rebooking options, and access to consumer protections.
1) Don’t cancel flights without speaking to your airline
If you are booked to travel through the region, do not cancel your flight without consulting your airline. Airlines may implement refund and rebooking schemes in response to disruption, and those schemes can provide a more direct route to relief than an insurance claim.
Importantly, cancelling independently could limit or void your access to compensation under Australian Consumer Law. In other words, even if you feel cancelling is the most obvious step, it may weaken your position. The better approach is to check what the airline is offering and what steps they require you to take to remain eligible for refunds or rebooking.
2) Contact your insurer and ask what is and isn’t covered
If you are unsure what your policy covers, contact your insurer. While war exclusions may be clearly stated, the details of what is captured by the exclusion — and what is not — can be crucial. Some travellers only discover the scope of their cover when they ask specific questions about their circumstances.
Even where an exclusion appears to apply, it is still worth clarifying the insurer’s position in writing, including which parts of your claim they consider excluded and why. This can help you decide what to do next and can be relevant if you later lodge a complaint.
3) Seek independent legal advice if needed
If you believe you have been treated unfairly, or if you are unsure how to interpret the policy terms, consider seeking independent legal advice. Community legal services can often provide general advice for free, which may be particularly useful for travellers facing unexpected costs and uncertainty.
Legal advice can also help you understand the relevance of concepts like unfair contract terms or unconscionable conduct to your situation, even if you do not intend to pursue formal proceedings.
4) Make a formal complaint through the appropriate channel
If you want to lodge a formal complaint about a financial product such as travel insurance, you can contact the Australian Financial Complaints Authority (AFCA) on 1800 931 678 or via its website. AFCA will make a decision to uphold or reject a consumer’s claim.
Alternatively, you can contact the relevant small claims tribunal in your state or territory. This may be another pathway for resolving disputes, depending on the circumstances and the type of claim being made.
5) Keep up to date with official travel advice
For Australians seeking up-to-date travel advice, the Australian government’s Smartraveller website provides current information. In fast-moving situations, official advice can change, and it may affect decisions about whether to travel, reroute, or delay plans.
Why this issue is catching people off-guard
It is easy to say travellers should read the fine print. But it is also true that many Australians have not had to grapple with a large-scale conflict affecting an entire region for a long time. When a risk feels remote, people may focus on the more familiar reasons they buy travel insurance: illness, accidents, lost baggage, or routine cancellations.
The result is a mismatch between expectations and contract reality. Travellers may assume a policy is designed for major disruption, while the policy is designed for a defined set of events — with exclusions that remove certain high-impact causes.
This mismatch is why the fairness debate matters. It is not only about whether an exclusion exists, but about how clearly it is communicated, how consumers understand it at the point of purchase, and how it operates in a real-world crisis when large numbers of travellers are affected at the same time.
What travellers can take away before booking future trips
While the current disruption is unfolding, it also offers a broader lesson about how to approach travel insurance. Exclusions are not a technical footnote; they are part of the core bargain in the contract. Understanding what is excluded can be just as important as knowing what is included.
For travellers, the practical takeaway is to treat policy wording as a decision tool, not just a purchase confirmation. If your itinerary involves transiting through regions that may be affected by instability, it is worth checking how your policy treats war and conflict-related disruption and what steps you would need to take if flights are changed or cancelled.
For those currently affected, the most immediate priorities are to avoid steps that could reduce your rights (such as cancelling without checking with the airline), to clarify your insurer’s position, and to use established dispute-resolution pathways if you believe the outcome is unfair.
Key steps at a glance
If booked to travel through the affected region, do not cancel your flight without consulting your airline.
Ask your airline about refund and rebooking schemes before taking action.
Contact your insurer to confirm what is and isn’t covered under your specific policy.
Seek independent legal advice if you are unsure about your rights; community legal services may offer free general advice.
To complain about a financial product, contact AFCA (1800 931 678 or via its website) or consider your state or territory small claims tribunal.
Check official Australian travel advice via Smartraveller for updates.
Travel insurance is meant to provide peace of mind, but it is also a contract with boundaries. When large-scale conflict triggers widespread disruption, those boundaries can become painfully visible. Knowing the limits of cover — and the steps available when cover does not apply — can help travellers navigate a difficult situation with fewer costly surprises.
