Insurers are threatening not to pay claims from thousands of policyholders whose flights have been cancelled due to the volcanic ash cloud sweeping across Europe from Iceland.
The Treasury and Financial Services Authority (FSA) have been alerted to concerns that stranded travellers making claims related to their prolonged journeys are being treated differently from insurer to insurer.
The ash cloud grounded flights across Europe for five days. Some providers, such as Fortis, are treating this as “bad weather”, and are offering cancellation compensation to stranded travellers who incurred hotel and travel costs that were not met by airlines.
But others, such as Citybond Suretravel, underwritten by Axa, have told policyholders that the disruption is not an adverse weather event, so it will not cover their out-of-pocket expenses.
“Our members are fielding calls from thousands of travellers wanting to know whether they will be covered,” said Graeme Trugdill, a spokesman for the British Insurance Brokers Association (Biba). “Policies use different terms, like ‘adverse’, ‘bad’ or ‘inclement’ weather. But the main issue is if this current ash cloud should be treated as a weather claim at all, leading to claims being denied.”
Although policies always vary in their level of cover, Biba says policyholders should expect the industry to be consistent in its treatment of an event. “We have asked the Financial Ombudsman for guidance, and alerted the FSA and Treasury, as policyholders need to know that they are being treated fairly now, not after they have made a complaint,” Trugdill said.
While a volcanic event is not covered in most policies, many insurers, such as Aviva, Direct Line, Saga and the Co-op, are making exceptions in this case.
However, Virgin Money, for example, says its policyholders are not covered for “natural disasters”.
Consumer group Which? said: “Consumers who are affected by the travel crisis should check their policy terms and conditions to see whether disruption caused by this event is covered. If it is not explicitly excluded, they should contact the insurer to lodge a claim.”
Policyholders should keep receipts of all reasonable, unavoidable expenses such as food, travel and accommodation.
“If the insurer refutes the claim on the basis that it is excluded from the travel insurance policy, policyholders should ask for a written explanation, referencing the relevant clause from the policy,” advises Which?
Travellers who have paid for flights, holiday and essential costs that have emerged as a result of being inconvenienced or stranded abroad can also lodge a claim from their credit card provider under Section 75 of the Consumer Credit Act.
See also: Volcanic ash: Q&A on travellers’ rights
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