I spoke with a representative of one major insurer who issues travel policies, and YMMV, but his conclusion was that because their policy language doesn't explicitly prohibit cycling, it is covered without additional ("hazardous sports") coverage being purchased. But getting to the bottom of it-- what does "yes, we cover cycling" really mean-- probably requires a careful reading of the policy.

In the case of the Australian tourist that I mentioned previously, she had liability exposure because the Korean national she collided with fractured her neck, and the family wanted money. So a travel policy which covered personal injuries would have been worthless, as the Australian was apparently uninjured.