Trip cancelled due to Israel-Iran conflict? Here’s what your travel insurance company will say

India has issued travel ;advisory for travellers to Iran and Israel

Just as the summer holidays are approaching and Indians are making plans to go abroad, comes the Iran-Israel conflict. Tensions between the two countries escalated last weekend, and led to India issuing an advisory cautioning its citizens against  travelling to the region.

This doesn’t just affect those who had plans to visit Israel or Iran. It also impacts those flying to Europe, for airlines across the globe have suspended or re-routed flights. Air India has temporarily halted its Tel Aviv flights, and global carriers like Lufthansa and Qantas are bypassing Iranian airspace.

Insurance brokers say insurance companies have told them to temporarily halt travel insurance sales for trips to Israel and Iran.

But what about those who have already purchased a policy? Here’s a look at how insurance companies will treat their claims:

I booked my tickets and bought insurance before the travel advisory

If you had drawn up plans to travel to Israel or Iran before hostilities broke out and the advisory was issued, you will have to cancel your plans (which means, your flight tickets and hotel bookings) for now. What’s more, if you were counting on your travel insurance policy to make good the loss due to cancellation, you will be disappointed.

Also read: Will Israel - Iran war result in a correction in equity markets?

Under most travel insurance policies, war and war-like situations, whether declared or not, are  excluded.

For example, Tata-AIG General Insurance’s travel insurance plan states that ``any loss that you experience due to a war or war-like situation will not be covered.'' Likewise, ICICI Lombard General Insurance’s travel policy provides an elaborate list of dangerous scenarios when your policy will not come into play. This includes war, invasion, act of foreign enemy hostilities, or war-like operations (whether war is declared or not), civil war, military coup, or usurped power.

Also read: Iran - Israel war - what it means for Indian markets?

This is the fourth major event that has disrupted international travel — the first  being Covid-linked travel restrictions in 2020, followed by the Russia-Ukraine war in 2022, and the Israel-Hamas conflict in 2023.

In all these cases, most countries, including India, issued advisories against travel to the affected regions, besides carrying out evacuation exercises to bring back stranded travellers, students, and employees.

“All insurers keep updating the ‘negative’ list of countries to which travel is unadvisable or barred. Geopolitical risks are not priced into travel policies, and a war-like situation is always an exclusion,” says Nikhil Apte, Chief Product Officer, Product Factory (Health Insurance), Royal Sundaram General Insurance. So, if you were to incur losses on hotel or flight bookings that you now have to cancel, you cannot file a travel insurance claim even if you had purchased the policy well in advance, he adds.

Also read: Israel - Iran war will not impact Indian economy for now

“Travel insurance is meant to cover unforeseen circumstances such as flight cancellations due to extreme weather conditions, natural calamities, disruption in the airline’s operations, and so on,” says Apte. For instance, if you had to cancel your flight due to a medical emergency because you or your immediate family member needs to be hospitalised, such losses will be reimbursed. “Any hospitalisation not related to war, such as an accident or illness abroad, will be covered. But any claim where the proximate cause is ‘war’ won’t be covered by travel insurance,” adds Apte.

Also read: Overseas travel insurance to get bigger and better

“Even if your policy comes with the 'Cancel for any reason (CFAR)' clause, war will still be an exclusion. CFAR will help if you cancel due to personal reasons — unlike regular travel policies, the presence of this clause will ensure that you do not have to specify a reason,” says Manas Kapoor, Head, Travel Insurance, Policybazaar.com

If you booked your trip post the escalation of conflict and travel warning

It is likely that you will not be able to obtain a travel insurance policy at all. Even if you happen to buy a product with ‘worldwide’ coverage where Iran and Israel are specifically excluded, there will be little relief. This is because war and war-like situations constitute a general exclusion, which comes into play even if a war is not declared.

What if I am currently in Israel or Iran

The unfortunate turn of events is particularly harsh on travellers who are already in these countries. Given the volatile situation, your insurance company will not be able to arrange flights to evacuate you even in case of a medical emergency. As has been witnessed during the Ukraine war or Covid crisis, it is the government of India that will carry out the evacuation.

“The cost of the journey or any evacuation to a neighbouring safe country will not be paid for. War-linked exclusion is a ‘hard’ exclusion, in the sense that there is no leeway,” says Manas Kapoor, Product Head, Travel Insurance, Policybazaar.com.

Also read: Crude prices ease as market factors in impact of Iran - Israel war; US denial to deepen crisis

If logistically feasible, however, your travel policy will pay for any medical expenses not linked to the war. That is, if you were to be hospitalised in, say, Israel, due to an illness, your insurer will reimburse the expenses. However, any injuries due to missile attacks, for instance, will not be covered.

Travel to countries not directly affected by the conflict

What’s more, even if you have booked a flight to, say,  New York, and your connecting flight from Mumbai to Dubai was cancelled specifically due to the war, you cannot hope for any compensation from the insurance company.

“When you file a claim related to trips even to countries not involved in the hostilities, you need to submit documents to back up the reason for cancellation. If the airline mentions `conflict' as the reason for flight cancellations, your claim will not be approved,” says Kapoor.