Insurance professionals are urging agents and operators to study the small print of the policies they sell as fears grow that many do not cover volcanic ash disruption.
Airports have been closed today and hundreds of flights cancelled across the UK as ash from an Icelandic volcano spreads.
Jeff Rush, chief executive of Rush Insurance, showed Travel Weekly a letter he had received from his underwriters Mondial Assistance which stated: “The cause of this delay is NOT an insured peril – as such there is no cover under the delay section of the policy for compensation or cancellation.”
Mondial’s client list includes big names such as Aer Lingus, Delta Air Lines, easyJet, Expedia, lastminute.com, Travel Counsellors, Tui and Virgin Holidays.
Rush added: “Most policies will specify the circumstances that need to prevail for the relevant cover to operate.
“Bad weather will almost certainly be specified but volcanic ash will almost certainly not.
“It will be open to the interpretation and flexibility of the underwriters of each policy product.
“Mondial’s other customers may have received a different letter to mine but there is a real possibility that underwriters will do what they can to avoid paying out as the margins are so tight due to the level of competition.”
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Rock Insurance managing director Antony Martin agreed that agents need to quickly check with insurance providers to find out whether the policies they have sold cover volcanic ash.
He added: “If flights are cancelled and they are part of a component-based holiday a lot of policies won’t cover the accommodation and car hire.
“I have had calls from accommodation-only customers wanting to know what the situation is.
“This is a key travel period at the end of half term and agents may have trouble rebooking customers flights.”
The Association of British Insurers is believed to be "assessing the situation" and will be releasing a statement later.
An Abta spokesman said: “We are working closely with the relevant authorities and airlines to ensure members are kept informed of the most up-to-date information on the impacts of this event.
“Passengers travelling imminently are advised to liaise with their travel provider or airline for the latest information in relation to their travel plans.
“Some airlines and tour operators have posted statements on their websites and this information will be updated on a regular basis until the situation returns to normal, at this stage no timescales have been indicated.”
All airports in Scotland were closed this morning and problems are moving south as winds blow the cloud towards London with flights in and out of all airports in between impacted.