Thousands of British holidaymakers’ travel plans were plunged into chaos in the middle of April after a cloud of ash from a volcanic eruption in Iceland shut down all UK airports, as well as many airports on mainland Europe.
To add insult to injury, many travellers discovered their insurance policies wouldn’t pay out any compensation, with insurers claiming the eruption and its aftermath was an ‘act of God’ and therefore excluded from their policies.
This is not the first time insurers have used this clause to get out of paying out for claims for natural disasters and other unexpected events. The terrorist attack in Bali in 2002, for example, saw some insurers paying out and others not (many insurers withdrew their terrorist cover post-September 11 and it's only in the past three years that insurers have added some terrorist cover to their policies).
Defending the stance of travel insurers, Nick Starling, director of general insurance and health at the Association of British Insurers, said: “While a volcanic eruption is not a specific insured event covered in insurance policies, some cover for delay and travel abandonment may be a available.”
He added: “It’s an urban myth that insurers are relying on an ‘act of God’ clause to get out of providing cover for this event. Although this event may not be specifically covered by your insurer, some are offering ex-gratia [voluntary] payments for those customers stranded abroad.”
However, all of us take out insurance for one reason only: to cover us for the unexpected. So when insurance policies fail to pay out, what kind of message is the insurance industry sending to its customers?
It’s certainly not: “We will cover you for the unexpected”. In fact, it’s more like: “We will cover you as long as it doesn’t work out to be too expensive”.
If the event falls into the latter category, you’d better be prepared to stump up the cash yourself.
Sure, insurers have to look at their profit margins, but if they want consumers to continue buying into their mantra that insurance is vital, it’s time they stopped using their small print as a cop-out and started helping their customers when they need it the most.
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