A potential volcanic eruption in your destination should deter you from travelling there out of fear of losing your life or facing severe travel delays at the very least. Even if you were to be safe from the magma overflow, volcanic ash alone can also severely disrupt your air travel. As recently as 2010, for example, a volcanic eruption in Iceland caused enormous disruption to air travel across Europe for at least a week. Given this, it's not surprising that the Ministry of Foreign Affairs of Singapore issued a travel warning on 23 September 2017, advising Singaporeans to defer their travel to Bali due to possible eruption of Mount Agung. If you have to cancel your travel plans because of Mount Agung, would you be able to ask for a refund?
Your flights will likely be rescheduled or refunded by the airline
Good news is that most airlines will be quite accommodating in response to the travel warnings. For instance, Singapore Airlines and Silk Air have already announced that customers traveling to Bali until Oct 2 that purchased their tickets on or before Sept 22 could rebook or request a refund. Other airlines like Scoot (and Tiger Air), Qantas, Jetstar and Virgin have also announced that they will assist passengers to reschedule their flights without imposing additional fees, subject to availability and fare difference. While some like Air Asia have yet to announce anything similar, most airlines are expected to follow suit.
Other bookings won't be as accommodating
Unfortunately, your accommodation and tour bookings won't be as easy to recover. Since each hotel, activity vendors and travel agencies have their own unique policies, they will most likely not refund your money even if you have to cancel your trip to avoid the impending volcanic eruption. Even if they were to allow you to reschedule your bookings, however, the hotel properties might be inaccessible due to damages to the building or its surroundings.
Would travel insurance have helped?
When your travel plans have to be altered or cancelled because of unforeseen volcanic activities, would purchasing a travel insurance policy have reimbursed for your lost travel bookings? Surprisingly, the answer is not an emphatic "yes." Instead, it really depends on which insurance company's policy you purchased.
As far as we've seen, FWD, Hong Leong Assurance and Budget Direct are few of the major insurance companies in Singapore that will reimburse you for cancellations due to travel warnings from the government. In contrast, many other insurers will specify that their trip cancellation benefit is "only claimable upon the occurrence" of certain insured events. This means that the natural disaster should actually occur before you can safely cancel your travel bookings and claim reimbursement from your insurance policy, and that cancellations due to travel warnings don't qualify for reimbursements.
This is why it's so important for you to read the insurance company's policy wording documents like the ones above before purchasing travel insurance. By doing so, you can make sure that you can actually claim for reimbursements in case certain events that can potentially be a factor in your trip actually occur. As long as you are careful to purchase a policy that is appropriate for your destinations and planned activities, you can actually save a lot of money and pain when unfortunate events alter your travel plans. For instance, a policy from one of the three named insurers above could have not only reimbursed you for your hotel and activity reservations in Bali, but it could have also allowed you to cancel your flights instead of merely "rescheduling" to another date when you may not be able to take days off work.
Value of travel insurance
To be sure, travel insurance isn't a must purchase for all travellers. Not only that, most travellers will rightfully feel that they don't benefit from buying a travel insurance policy. Afterall, even mishandled bags, one of the most common travel inconveniences, only occur 6.96 times per 1,000 passengers, representing probability of about 0.7%.
However, it's times like these that the value of travel insurance really becomes apparent. Random, unexpected events like a volcano eruption can occur and significantly alter your travel plans. While it may not make sense to purchase a travel insurance policy for each trip you make, it may still be advisable to do so when you know your trip faces not-so-insignificant probability of facing certain events like volcano, typhoons or injuries from sports. If you know you will be travelling during typhoon season or that you will be engaged in potentially dangerous sports activities (i.e. snowboarding), spending an extra S$20-S$30 on your trip isn't that big of a cost to give yourself some peace of mind.