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Scott Heppell  /  AP
Affected by the ash cloud? Read your policy carefully.
By Christopher Elliott Travel columnist
msnbc.com contributor
updated 4/21/2010 11:31:36 AM ET 2010-04-21T15:31:36

Scott Sobel probably should have known better. When he booked tickets from Washington to Dublin on the Delta Air Lines Web site, he clicked on the insurance button without first checking the fine print.

Then a volcano erupted in Iceland last week. You know, the one with the unpronounceable name. Flights were canceled across Europe, including his. Which is when he discovered his policy excluded volcanoes.

“They basically said, ‘Your insurance doesn’t cover anything,” he says. “There was nothing they could do.”

When he realized he was out of luck, Sobel says he felt “stupid.” Maybe that’s because before he became a Washington-based communications strategist, he was a consumer reporter. “I always say, ‘Buyer beware.’ But I wasn’t aware enough,” he told me.

He’s hardly the only one feeling the pain of the volcanic ash. Thousands, and perhaps tens of thousands, of air travelers are calling their insurance companies in the aftermath of this natural disaster. Some are covered; many aren’t.

“Most American insurance companies are considering this a weather event, which is included as a covered reason in travel insurance policies,” says Damian Tysdal, who publishes the insurance site TravelInsuranceReview. “Any policies with trip cancellation, trip interruption or travel delay coverage will provide coverage. But keep in mind there are policy limits.”

Paul Seiferth, a Phoenix-based travel agent, is just one of many people who are learning about the limits of coverage. He’d booked a European river cruise for a group of 57 passengers that was to have set sail on Saturday. Then Eyjafjallajokull erupted. His customers had travel insurance, but despite repeated inquiries to their company, they remain unsure how it will apply to their situation.

“Is this a trip interruption?” he wonders. “Is it a weather-related problem? Exactly what is covered? I can’t tell you yet.” Slideshow: Eruption in Iceland

Roughly 1 in 3 vacations are insured, according to insurance industry estimates. Access America, the largest travel insurance company, reports thousands of its customers are affected by the fallout from Iceland’s volcano. (Exact numbers are difficult to come by, because the eruption hasn’t stopped.) Many Access America policies offer trip cancellation and interruption coverage when there is a complete cessation of air service due to a natural disaster, such as the volcanic eruption. Some plans also include a travel delay benefit that helps you recover the costs for some unanticipated hotel and restaurant bills. Millions of dollars in covered claims may be the result, the company announced on Monday.

The problems travelers have encountered seem to fall into three general categories:

1. Travelers with imminent flight plans. These are passengers who haven’t left yet, and whose flights to Europe have been canceled because of the eruption, like Sobel and Seiferth’s customers. They’re waiting for the air to clear so that they can get on with their trip, or what’s left of it. That appeared to happen — at least temporarily — this morning, as some flights to and from Europe resumed . These air travelers may choose to make a trip interruption claim —which may or may not be honored.

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2. Travelers who are mid-trip and can’t get home. No point rehashing this, since it’s part of the 24/7 Eyjafjallajokull coverage . I’ve answered some frequently asked questions for stranded air travelers regarding their rights under EU law and their airlines’ contracts in this post. These passengers are likeliest to call their insurance company’s assistance services, which can help them find accommodations, help them rebook a flight home or get medical attention, if necessary.

3. Travelers considering a European vacation. Reader Peg Katt is planning to rent an apartment in Iceland next month. “I went to go get travel insurance and I’m now being told that the volcano in Iceland is being considered a foreseeable event and won’t be covered under any travel insurance plan unless I purchased it before the first eruption happened,” she says. These travelers need to know if a European trip is still insurable, and if so, when they might make their travel plans.

Video: Airspace reopens; carriers tackle backlog What if you’re one of the unlucky travelers affected one way or another by the ash cloud?

Read your policy. Most people gloss over their travel insurance policy when they book a trip, and with good reason. The fine print is dense and dull. Although I recommend reading it carefully before your purchase, I have to admit, it’s about as much fun as doing your taxes. Not every policy will address an event as specific as a volcano, but instead will refer to a natural disaster. After reviewing your policy, you may believe there’s no hope for a claim. That’s not necessarily true, according to Bob Chambers, the director of operations for CSA Travel Protection. “Travel insurance companies exist to help travelers in need and they truly want to service their customers,” he told me. You should assume your claim will be honored, he said.

Contact your insurance company. It’s never too soon to get in touch with your insurance company. A call is a good start, but my advice would be to switch to email as soon as possible, so that you create a paper trail. That way, if assurances are being made that you’ll be covered, you have it in writing. There’s time to file a formal claim when you get home, according to Dan McGinnity, a spokesman for travel insurance company Travel Guard. “Our customers stuck in Europe are still incurring additional expenses and should file their claims when they return home,” he says, adding, “Anyone who has a Travel Guard policy who has returned home and believes they are covered should open the claims filing process.” (Travel Guard’s definition of a natural disaster includes volcanoes, but provides for a cancellation only if the policyholder’s primary residence or destination is “made uninhabitable” by the eruption.)

If you have a valid claim, file one. “When filing a claim, be as complete as you can when filling out the claim form and include all requested documentation,” says Jill Roberts, a marketing manager at Travelex Insurance Services. “If a claim is denied, the notice of denial should include the reasons why the claim was denied, such as missing information or documentation, and instruct you how to resubmit this information for reconsideration or file an appeal if appropriate.” There’s a statistic that’s thrown around often in travel insurance circles: About 90 percent of all appeals on denied claims are successful. So your chances of overturning a denial are relatively good. Given all the recent attention paid to the volcano, they may be slightly better than that.

Video: More eruptions likely, Iceland chief says Don’t take “no” for an answer. If you’re denied, get it in writing, and don’t accept the first “no” even if you feel like walking away from the whole mess. That’s the advice of Mark Allaben, a vice president and actuary with The Hartford. “Ask what the complaint process is and follow the instructions,” he advises. “If the complaint is not resolved, write to the president or chairman of the insurance company.” He says most complaints to the chairman get high priority within the company. But there are other ways of escalating your case. Write to your state’s insurance department. “All insurance departments try to help out the insured and can intervene with the insurance company on the insured’s behalf,” he says. Remember, the odds of you prevailing are reasonably good.

If you’re shopping for insurance for a future trip, wait. You may not need insurance, and even if you have it, it may not cover you if the eruption continues. Most insurance companies stopped covering the volcanic eruption in Iceland after the event. Once the event ends, the companies will begin writing policies that cover Eyjafjallajokull. Jack Taylor, a professor of retail and an insurance expert at Birmingham-Southern College in Birmingham, Ala., says insurance may not be necessary for your upcoming vacation. “The only time I would suggest purchasing travel insurance is if the risk is greater than the cost,” he says. “If it something you have to do and it has to be perfect, then it may be beneficial to look into travel insurance.” Otherwise, you should be fine working with the cancellation and rebooking policies of the airlines and hotels, which, at least so far, have been relatively reasonable.

That’s what happened to Sobel, the reporter-turned-consultant whose flight to Ireland was canceled after the eruption. A member of his party talked Delta into offering a full refund, and since they’d blocked off the week already, they decided to scrap their plans to visit Ireland.

“We’re going to Puerto Rico for a week,” he told me just minutes before boarding a flight to San Juan. No volcanoes there.

Christopher Elliott is the ombudsman for National Geographic Traveler magazine. You can read more travel tips on his blog, elliott.org or e-mail him at celliott@ngs.org.

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