As you can imagine we’ve been receiving questions about the current volcano eruption in Iceland and the ash cloud that it has released. How does travel insurance apply?
Travel Insurance policies contain 4 separate coverages that might apply:
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1. trip cancellation,
2. trip interruption,
3. missed connection, and
4. travel delay.
All 4 of these are “named peril” coverages which will only provide coverage if the claim was caused by one of the specific covered events.
The ash cloud caused by the eruption can be classified as either a “natural disaster” or an “adverse weather” event. This classification can have a big effect on coverage for trip cancellation and interruption coverages. Under those coverages some, but not all, companies include “natural disasters” which causes your airline to cease operations to be a covered event. Most of the plans limit coverage for “natural disasters” that make your destination uninhabitable. A more common covered event is “adverse weather” causing your airline to cease operations for a specific time period(usually 24 hours). If the event is interpreted to be a “natural disaster” coverage might be limited for trip cancellations or interruptions unless it’s one of the plans that include “natural disasters” in their covered events that causes your common carrier to cease operations otherwise the question is did it make your destination uninhabitable?
Coverage for travel delay and missed connection is clearer. These coverages are also “named peril” benefits however, the majority of plans include “natural disaster” as a covered event.
As with all travel insurance coverages, the event that causes your loss has to be reasonably unforeseeable at the time you purchased your policy. For some plans you would have had to purchase the insurance prior to April 13, 2010 for it to be unforeseeable others are using the 14th or 15th as when it became foreseeable. Click here for a current list of Travel Insurance Company announcements concerning this event.
Bottom line is to read your plan carefully and don’t assume that there will or will not be coverage.