The eruption of Eyjafjallajokull in Iceland has prompted many travelers to ask, “How does travel insurance work in this situation?”
When was travel insurance purchased?: The purchase date of a travel insurance policy will determine whether or not a catastrophic event is eligible for coverage. Any policy bought after an event or natural disaster becomes “foreseen” will not cover situations related to that event. For a hurricane, it is when the storm is named. For the H1N1 flu, it was the declaration of a pandemic. To be eligible for coverage for the eruption of Eyjafjallajokull and subsequent ash clouds, most travel insurance carriers require a policy be purchased before April 13th.
What about other eruptions?: The eruption of Eyjafjallajokull is considered an ongoing event. This means if this volcano erupted again, it would be part of the same event and subject to the April 13th deadline for purchase. When the eruption stops, volcanic ash clouds subside and air travel returns to normal, travel insurance carriers will declare this event over. After then, another volcanic eruption would be considered a new event and another purchase date deadline will be determined. If there is a separate volcanic eruption while the Eyjafjallajokull is an ongoing event, travel insurance carriers will individually determine what separates the first eruption and ash clouds from the second eruption and ash clouds. Check the travel insurance carriers’ position statements for more details.
Will coverage be extended?: If the scheduled return date passes while the traveler is delayed, then coverage can be extended. Check the policy’s certificate of insurance for the time limit of an extension, normally about 7 days. Some benefits, such as travel delay, have set dollar limits. When the dollar limit is reached, coverage is no longer available.