Myth busting – MPI explains it all

Force Majeure should not be confused with an Act of God, although there are similarities.
Most T’s and C’s for travel companies will have a clause that removes the company’s liability in the event of Force Majeure or an Act of God. Both are events that are outside the control of the company and thus the law allows them to avoid liability – provided this is shown as an exclusion in the T’s and C’s.
This then shifts the reasonability for any financial loss on to the travelling customer. He, in turn, will be able to obtain insurance for most (not all) events of Force Majeure and Acts of God.
In order to provide customers with a solution to this matter it follows that a prudent travel company will offer or recommend a suitable travel insurance policy – and if its business falls within the Package Travel Regulations it is a legal requirement to do so.
In turn, there is usually a clause obliging customers to obtain travel insurance covering the period from booking to travel (for cancellation), medical, repatriation, personal liability and travel disruption for the duration of the journey. Failure to do so would absolve the travel company of any liability that would have been covered by travel insurance as well events following Force Majeure and an Act of God.
However to arrange insurance for customers requires a licence or an ‘umbrella’ arrangement for compliance with the rules of the Financial Conduct Authority which is why at MPI we have an Affiliate scheme allowing clients to ‘signpost’ customers directly to us without the need to arrange insurance on a bloc basis.
Force Majeure is an event which occurs resulting in disruption of travel plans. These would be sudden, unexpected and not foreseeable at the time of entering into the contract (date of booking).
They are usually following the actions or inaction of parties not connected to the contract for example air traffic controllers on strike or French fisherman blockading Dover. This would also extend to war, insurrection and riots. Some of these events are insurable but not all e.g. war.
An Act of God is any natural event e.g. storm, earthquake or tsunami.
In both examples above these events are known in insurance (and the law) as perils.
So watch out to see which perils are covered under the travel disruption sections.
 At MPI there are two and they cover different situations. In addition, in some cases there may be cover under the cancelation section e.g. your accommodation is taken out by an avalanche or there is an FCO warning.
Why do travel companies not insure this risk?
In MPI’s Newsletter 10 we explain in our Pour Memoir the principle of insurable interest. The travel company does not carry a liability and thus is not able to obtain insurance. They have nothing to insure.
In MPI’s view if this concept did not exist the cost of holidays would be considerably higher as travel companies would need to maintain large reserves to meet any liabilities.