Insurers abandon ash cloud victims

By JAMES SALMON FOR THE DAILY MAIL
Updated: 03:50 EST, 21 April 2010

Tens of thousands of British passengers stranded by the Icelandic volcano ash clouds face eye-watering bills after travel insurers threatened to snub their claims.

Angry holidaymakers have lashed out at insurance companies which are using loopholes and small print to avoid refunding legitimate expenses for accommodation and food caused by the travel chaos.

Many have been left thousands of pounds out of pocket after being stranded on the other side of the world.

'Act of God': Some insurers are refusing to pay out following the volcanic eruption in Iceland

Others have racked up huge costs after battling their way home from the Continent or have spent hundreds on holidays they will not be able to take.

The independent Financial Ombudsman Service is preparing for a consumer backlash, with thousands of furious holidaymakers ready to fight their insurer over payouts.

'We feel helpless,' says Jane Wardley, who is stuck in Dubai with her husband and their 11-year-old daughter, Eleanor.

'At first, our insurer, Lloyds TSB, said it wouldn't pay out, but now they say they will. It doesn't fill you with much confidence.

'They say we can make reasonable expenses, but we have to guess what that means. If they suddenly decide something is not covered, then we will lose hundreds of pounds.'

The Wardleys, from Harpenden, Hertfordshire, have had to move to a hotel two hours from Dubai to save money.

Airline Virgin says the first flight on which they can get home is next Tuesday - ten days later than their original return date.

Among the big names refusing to compensate policyholders are Mondial Assistance - which provides insurance for easyJet, Lastminute.com, Thomson and First Choice - and Virgin Money. Aviva, Britain's largest insurer, is prepared to offer a goodwill gesture of up to £250 for costs on delayed flights.
 
Well-known brands Direct Line and Churchill, both part of taxpayer-owned Royal Bank of Scotland, are refusing to cover costs for those stranded abroad.

One couple caught out by Virgin Money's stance are Juliet and Edwin Schooling Latter, who last weekend were due to jet off for a first wedding anniversary trip to Italy.

EasyJet says it will refund their £400 flight costs, but it is doubtful that the couple will be reimbursed for the £300 they paid for a hotel and £50 airport parking by their insurer.

'It is so upsetting to miss out on a trip we were looking forward to so much,' says Mrs Schooling Latter.

With flights to and from Britain grounded since Thursday, travel insurance firms have been bombarded with claims.

Initially, some companies, including Greenbee - which is sold by John Lewis - refused to pay out. But as consumer anger grew, these firms buckled.

A few insurers, including HSBC, Halifax and Lloyds TSB, have promised to cover at least some of the costs travellers have incurred if the airline or tour operator doesn't foot the bill.

Those firms leaving travellers in the lurch all make the same excuse - that they don't cover natural disasters, such as volcanic eruptions. The more generous companies have taken the view that the flight ban is due to severe weather, which is covered.

'Insurers need to face up to the reality that if people are confused, then some clarity is needed so we all understand what is and isn't covered,' says Rochelle Turner, editor of Holiday Which?

'There is a serious risk that after this situation, people will say what's the point of holiday insurance.'

Ros Fernihough, a travel law specialist, says: 'On this occasion, insurers are being unfair to the travelling public.

'They should bend and break the rules because this is not a normal force majeure - act of God.

'It seems they have said ''This will cost us a lot of money'', so they have decided not to pay out.'

A spokesman from Mondial Assistance says: 'Our policies cover specific perils that have a relatively high probability of impacting Britain, such as severe weather conditions. But the volcanic ash plume is not an insured peril and as such there is no cover for compensation.'

Virgin Money, whose insurance is provided by Insure And Go, says: 'Natural disasters are not included and therefore cover is not available.'

Some insurers have offered to refund premiums to those who bought single trip holidays.

They will also extend cover if you're stranded abroad or transfer your cover if your holiday is rescheduled.

Mondial won't pay our £1,000 bill

Caroline Brinton, 49, and her family have been stranded by the volcanic eruptions and their insurance company, Mondial assistance.

They have been stuck in a hotel near Stansted airport since Thursday after their flight home to Majorca was cancelled.

Stranded: Caroline Binton with husband Francisco and their son Alex

The family have been told they won't be able to fly until tomorrow at the earliest. Meanwhile, the costs are racking up. The hotel room costs £75 a night and Caroline estimates they have spent between £800 and £ 1,000 on accommodation, food and taxis ferrying them to and from the airport. They bought insurance via easyJet's internet site, but Mondial assistance is refusing to pay out.

Caroline, who runs a language school, had been on a short break back home in Britain with her husband Francisco and their son Alex, who has Down's syndrome (all pictured above).

'It's incredibly frustrating,' she says. 'We are not getting any help from our insurer, which seems to view this as an act of God.

'What on earth is the point of paying insurance if it doesn't pay out when things go wrong?'