Six balloon crash victims had bought travel insurance from China Merchants Insurance that did not cover them for compensation, except for a "humanitarian" payment of the expenses to bring their bodies home.
Company general manager Simon Chan Kwan said aerial activity was excluded from the insurance coverage and that it was so stated in the policy document.
"The policy does not cover balloon activity but we will assist and pay to transport the bodies back home on humanitarian grounds," he said.
Through travel agent Kuoni, three of the nine victims bought insurance from Generali, which covered ballooning. The rest bought it from China Merchants, through an agent known as Union Faith.
According to the website of Union Faith, travellers are asked to pay attention to activities not covered by the policy.
These included air travel other than as passengers on a properly licensed, power-driven aircraft. While this excluded hot-air balloons, parachuting was included.
A spokesman for Union Faith declined to comment.
"We just act as an agent for China Merchants," he said.
It was not known whether the agent had explained the terms of the policy clearly to the victims.
A 10-day insurance package offered by the company costs HK$107 to HK$226, depending on the level of compensation. It can be bought online. The lack of insurance coverage for the six led some to wonder if balloon operator Sky Cruise had any insurance coverage for passengers.
Kuoni said yesterday it was still trying to gather information on this.
The agency earlier said the insurance package offered by Generali included a maximum payout of HK$500,000 for accidental death.
It also covered expenses for transporting bodies home, as well as discretionary compensation of up to HK$50,000.
Industry experts said insurance companies had increasingly started to include dangerous activities in their travel insurance but that families would have to examine their specific policy to determine the scope of the coverage and the level of compensation.
Insurance sector lawmaker Chan Kin-por said it was common for travel insurance companies to add a clause excluding aerial activities. If that was the case, the families of the six victims might be left without compensation, he said.
"Aerial activities such as parachuting, bungee jumping, and water sports like scuba-diving are commonly excluded, unless stated otherwise."