Will your travel insurance cover problems caused by volcanic ash?

travel insurance ashIf you're among the hundreds of thousands of travelers whose vacation or business trips got covered in ashes by a volcanic eruption in Iceland this week, your travel insurance is likely to bail you out -- at least partly.

As ash continued to spew into the atmosphere from a volcano in southern Iceland on Friday, Europe's air traffic control canceled even more flights, leaving scores of travelers scrambling to make alternate plans.
The unprecedented situation forced the closure of Europe's three biggest airports, leaving scores of travelers wondering if their travel insurance would cover long delays, which included unexpected hotel stays and meals out. Travel associations advised passengers to stay home and check with their airline before coming to an airport.

If you bought your policy before April 13 and your trip was delayed by the eruption, you're likely to qualify for travel delay and missed connection coverage if you keep expenses reasonable and hang onto your receipts. Travel insurance experts expect most of the claims filed in connection with the volcanic eruption to fall into these two categories.

So what can you spend on hotels, food and toiletries and still be reimbursed?

"The old issue with insurance is what is reasonable and customary?" said Chris Harvey, chief executive officer of squaremouth.com. "You usually have an amount per person per travel day. The average is $150 per day and how you spend it is usually fine."

Harvey, who founded squaremouth.com in 2001 to help consumers compare major travel insurance plans, said that the 23 U.S. carriers listed on his site all offer 24-hour emergency assistance hotlines that stranded travelers can call toll free for advice.

More and more folks are likely to be buzzing these hotlines for assistance, as Eurocontrol announced it will operate only 42% of its usual number of flights in European air space today as an ash cloud from the Eyjafjallajoekull Volcano continued to drift toward the continent. Microscopic ash particles in the cloud can cause jet engines to catastrophically shut down and impede pilots' visibility.

The European travel authority expected the cancellations to last at least through Saturday morning and warned they could go on for several days beyond that.

While travel insurance experts expected that those who experienced trip delays and missed connections would be reimbursed for their troubles, what's less clear is if carriers will cover those who were forced to cancel their trip due to the eruption. Typically, travel insurance does not cover trip cancellations prompted by natural disasters, Harvey said.

But the almost total shutdown of parts of busy European air space brought about by this week's eruption prompted several of the largest travel insurance providers to classify the situation as a "weather disturbance" rather than a natural disaster. See a list of providers and their latest stand on the matter.

Europeans are more likely to purchase travel insurance than their American counterparts. About 90% of Europeans buy policies when they travel abroad, versus about one in four Americans, Harvey said. Squaremouth.com also has a site in England that caters to Europeans who buy travel insurance.

For those who didn't purchase insurance before April 13 for vacations currently being affected by the eruption, it's unclear whether a mandate by the European Union that requires airlines to reimburse travelers for hotel and food expenses will apply.

"The wording in these proposals may let them get out of it, if it's something that's beyond their control like a meterological issue," Harvey said.

He added that travelers who are worried that the eruption will continue to disrupt worldwide travel in the coming weeks should not consider purchasing insurance now because policies will not cover trip cancellations or disruptions caused by a "foreseen event."

"If you see the news and freak out and buy it right now they are going to sell you insurance, but they are not going to pay a claim on this particular issue," Harvey said. "That's very important that you don't waste your money."

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