Australians who were stranded and lacking insurance in Bali last month amid volcanic activity should have been aware of policy exclusions, the Insurance Council of Australia (ICA) says.

Thousands of tourists were trapped on the island for several days, with many fearing they would run out of food and accommodation, as an ash cloud shut the airport.

Several Australian travel insurers told policyholders they would be covered only if they had bought policies before September 22, when the Indonesian Government issued a volcano alert.

Cover-More had an exclusion date of September 18, when the alert status was lifted from “normal” to “vigilance”.

ICA spokesman Campbell Fuller told insuranceNEWS.com.au most insurers had exclusions posted prominently on their websites, and the volcano risk was widely reported.

“Insurance is meant to be for the unexpected and unknown,” he said.

“The Australian Government and the Insurance Council of Australia both encourage travellers to buy travel insurance when they book their fares and accommodation, to ensure they are covered for unexpected events, instead of leaving their insurance until shortly before their departure.”

However, Financial Rights Legal Centre Principal Solicitor Alexandra Kelly says insurers could do more to alert customers to policy exclusions.

“Insurers often have more information about risks than people do, and we do not think insurers are clear with the limitations of policies at all,” she told insuranceNEWS.com.au.

“We have spoken to many people who obtain insurance over the phone, online or in person who are not aware of the exclusion in policies for known or declared risks such as volcanoes or other perils.

“They advise us they are rarely told of the information directly at point of purchase – that there may be some reference on the website but this is of no value if they purchased it in person or over the phone.”

She says insurers need clearer exclusion warnings at point of purchase in all channels “to build trust and confidence and reduce loss”.