Iceland volcano: What are your rights?Consumers' questions answered

21 April 2010

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Which? Holiday's experts answer your most crucial questions about the Icelandic volcano eruption and your travel insurance.

How do I make a travel insurance claim?

If you're affected by the travel crisis, first you should check the terms and conditions of your travel insurance to see whether disruption caused by this event is covered. If it is not explicitly excluded, contact the insurer to lodge a claim. It might be worth making a claim even if you think it might be excluded, as some insurers have stated that they will be covering this incident as a goodwill gesture, even though it might normally be excluded.

To make a travel insurance claim, you should itemise all losses, and send copies of all relevant receipts and information of any direct losses, such as the cost of airline or holiday tickets as well as any essential and reasonable additional outlays including accommodation and sustenance costs. What costs are 'reasonable' depends on the situation, but insurers can reject parts (or all) of a claim, so if you are unsure whether a particular cost is reasonable it may be worth including it.

When checking your travel insurance note whether the policy has a cap on the amount you can claim, and whether there is a time limit in which to make a claim. Typically you can only claim for a set amount or for costs incurred within a set time period, e.g. within 36 hours of your flight's scheduled departure. If it does have restrictions, contact the provider and query whether the limit applies in this circumstance.

No 'Act of God' exclusion

You may have heard that the effects of a volcano eruption are not covered by travel insurance, but according to the Association of British Insurers, there is no such thing as a broad 'Act of God' exclusion in travel insurance policies. Insurers should not reject your claim on these grounds.

If you're stranded abroad, report your circumstances to your insurer as soon as possible. Keep receipts of all reasonable and unavoidable expenses you incur, such as food, travel and accommodation costs as you'll need these for your travel insurance claim.

My insurer says it will only consider my claim after I've sought redress from the airline or credit/debit card provider. Should I wait till the airline / card provider has responded?

No - they shouldn't be telling you this. While it is in your interest to get losses back from airlines/card providers, your insurer should still process your claim if you go to them first.

What can I do if my travel insurance claim is rejected?

If the insurer refuses the claim on the basis that it is excluded from the travel insurance policy, ask for a written explanation, referencing the relevant clause from the policy.

If you're not satisfied with the insurer's response, lodge a formal complaint. Be sure to head all correspondence 'formal complaint' in email subject headings and on all letters and on the envelope.

The provider must respond to complaints within eight weeks, after which time the matter can be taken to the Financial Ombudsman Service (0300 123 9123). Which? anticipates that there could be a large number of claims, so it's possible that The Ombudsman may take several months to deal with your case, but you should be kept informed on the progress of your case.

What if the Ombudsman finds in favour of the insurer?

If you're dissatisfied with an FOS decision, you can consider court action. This can prove costly so get legal advice on whether it might be a realistic option.

For claims below a certain level, court costs aren't so high, and you won't need a solicitor though you can have one. These cases are heard as a small claim, except in Scotland, where they’re heard at the Sheriff's Court. These limits are £5,000 in England and Wales, £2,000 in Northern Ireland or £3,000 in Scotland.

It will be most costly if your claim exceeds a these levels, as you'll have to use the civil court. You'll need a solicitor, and a barrister for complex cases – and court costs can be high - and if you lose you may have to pick up the other side's costs. 

If you are interested in pursuing your claim through the small claims court, see our step-by-step guide on making a small claims court claim

How else can I pursue my travel insurance claim?

Which? believes that insurers should deal with all claims as they are lodged. However there are other sources of redress that you should consider to get compensation as quickly as possible.

Aside from travel insurance claims, travellers who are affected by the ongoing crisis should keep in contact with their airline or holiday provider. Airlines which are based in the EU are not only required to try to find an alternative route, they should also give you a full refund for flight cancellations, or provide you with an alternative flight. If your airline is based outside the EU you may not have the same protection but it's worth checking.

You should scrutinise your carrier or holiday provider's terms and conditions to establish what you can claim for and how to claim.

If you booked a package holiday it will be covered by the ATOL scheme, which offers protection in the event that a traveller is stranded abroad. If you just booked flights, it's still worth checking as you still might be covered.

Did you pay by credit or debit card?

If you paid for flights or holiday on your credit card, and incur further expenses as a result of being inconvenienced or stranded abroad you can also lodge a claim for losses with your credit card provider, if the initial cost incurred is for between £100 and £30,000. This is law under Section 75 of the Consumer Credit Act

If you paid with your debit or prepaid card provider, or your claim is for less than £100 and you paid with a credit card, you can lodge a claim with the provider under the Chargeback process. Receipts are required for claims.

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