Does Trip Cancellation Insurance Cover Volcanic Ash?

If the Icelandic volcanic ash phenomenon had cancelled your trip to Europe, or ruined your land tour, or folded your seminar, would trip cancellation insurance have safeguarded your prepaid cash? Probably yes, but you still need to know the fine print.

During the recent volcanic upheaval in Europe, most airlines would have either offered their patrons a refund on their cancelled flight, or transferred them to another flight when air services resumed, and they may well have paid for some hotel and meal costs during the delay period. But there are limits to these benefits; they are not going to pay for days on end. And though they may cover hamburgers for lunch, they won’t pay for filets. Certainly, they are not going to pay if the cancellation prevented you from catching a cruise from some Mediterranean port, or if you missed a land tour through some part of Europe or the Middle East, or if your tour involved five days of theatre performances in London.

And that’s where your travel insurance comes in. Most policies have clauses for covering such costs if travel is cancelled or rescheduled by the supplier, or if a travel advisory is issued following a natural disaster (assuming the advisory was issued by an official authority like a government and was issued after you bought your tour package). Many policies would also provide benefits if weather or some other natural disaster would have prevented you from travelling for at least 30 per cent of your trip.

Because trip cancellation policies vary from one insurer to another, they often tend to be misinterpreted—and I agree they are too complicated and need more plain language and standardization. But if you know what you’re buying, they can certainly be worth it. Still, you need to pay attention to what your insurance contract says. Don’t fall for sales pitches like: “Don’t worry, everything is covered.” It isn’t. There are always conditions. A true travel insurance specialist will take the time to point them out.

Many policies, for example, will not cover a tour that is cancelled because the air carrier, or cruise ship, or tour operator goes bankrupt and drops out of business, although you may get recourse from your credit card company, or the receivership handling the bankruptcy, or an industry or government regulatory body that oversees the charter or tour companies. But that can get messy at times.

All travel insurers now include language concerning cancellation or trip interruption caused by civil rioting, insurrection, or terrorism outbursts. Make sure you understand it. For example, if you’re planning a tour of the Middle East, or Greece (which is in a precipitous monetary crisis), or if you’re planning to visit relatives in Chechnya this summer, don’t pay any more deposits than you have to up front, and check with your official government alert system to see if any warning has been posted about travel to your chosen destination. As a rule, insurance purchased after your government has issued a warning not to travel there may invalidate your coverage.

In trying to make trip cancellation policies more inclusive, some insurers are now offering “Cancel for Any Reason,” or “Change of Mind” policies. Their wording varies, but the intention is to cover you no matter what the circumstance. But even this is not 100 per cent cover, and you need to know about the exclusions. Some, for example, will reimburse more if you cancel well ahead of your scheduled departure, while only a small percentage will pay if you cancel a few days before you are due to leave. Others will not cover you if a pre-existing condition was involved.

All trip cancellation policies have exclusions. If you take the skeptical approach and understand that nobody covers absolutely everything, you’ll be fine.

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