Page last updated at 11:00 GMT, Monday, 19 April 2010 12:00 UK

Iceland volcano: Travel insurance confusion

Sign over the M23 motorway
UK airports have been closed as flights have been grounded

Travellers whose holiday plans have been ruined by the volcanic ash that grounded UK flights face confusion over insurance.

Although airlines will refund or rebook flights, many passengers face the cost of hotel rooms and car hire that have not been taken up.

Some travel insurance policies are expected to pay out for these losses but others are not.

People are being urged to check the small print and contact their insurer.

The volcanic ash has turned into quite a financial disaster for my business.
Louise Guinda, Safe Dreams

"Travel insurance policies will differ in this situation," said Nick Starling, of the Association of British Insurers (ABI).

"There is no standard set of conditions which applies to a situation of this kind. Therefore customers should check their travel insurance policy, and speak to their travel insurer to understand what their individual policy covers them for in this situation."

Clouded issues

Most flights in the UK are still grounded as ash from a volcano in Iceland continues to drift across Europe.

Departure board

Thousands of flights have been cancelled and airlines will refund or rebook passengers to alternative flights. They also have a duty of care to offer stranded passengers hotel rooms and food.

However, with the situation expected to affect flights for a number of days, more and more people yet to travel will decide to choose the refund, rather than arriving late at their holiday destination.

It is often the case that cheaper insurance deals will have less cover and so will not pay out on losses, such as cancelled car hire.

Others said they would treat the incident as a case of bad weather. They could consider a claim as a delay that led to the abandonment of a trip.

"Not all insurance policies are the same and travellers are urged to contact their insurance provider to clarify their specific policy coverage as not all insurers will necessarily cover this," said Steve Foulsham, of the British Insurance Brokers' Association.

Copies of written evidence of cancellations, such as information from airlines' websites, should be sent with any claim.

Holiday plans

Those expecting to fly in the coming days may also face insurance issues.

If they have booked a holiday but have bought insurance since Thursday, they might not be covered for losses caused by the ash disruption.

"As with all insurance policies, you are unable to insure for an event or incident after it has happened," said Jennifer Thomas, spokeswoman for Direct Line Travel Insurance.

"Therefore, customers wishing to buy travel insurance today will not be covered for travel delay or missed departure arising from the volcanic ash as they are buying cover in the knowledge that there is a problem.

"This highlights the importance of buying travel insurance as soon as you book your holiday or flight."

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