Volcanoes and travel insurance: is my trip covered?

If you bought trip insurance before the recent volcanic eruptions, your travel may be covered by the policy, depending on exclusions. But if you are hoping to get travel insurance to protect you from any volcano-related disruptions in the future, you are probably out of luck – Scott McCartney of the Wall Street Journal reports that as of April 13, there is no ash coverage anymore. It’s similar in principle as to why you can’t call your agent to buy a flood insurance policy in the middle of a hurricane. Insurance covers unexpected events, not events that are in progress.
Now if you already had trip insurance, are you covered? That’s a complicated issue because there are no standard travel insurance policies – they vary widely. Whether or not you are covered will depend on the type of coverage you bought, how much coverage you bought, what the exclusions are, and the specific practices of the company you bought it from. McCartney says:

Even if purchased before April 13, travel insurance can be of limited utility to travelers. If airlines refund tickets for canceled trips, for example, there’s no claim with insurers. If you haven’t left home, you won’t get money for hotels and accommodations under most policies. And many policies have limits on daily expenses if you are stranded away from home.

He notes that even if you have a prepaid stay, trip insurance often only covers rooms that are deemed “uninhabitable.”
It’s too soon to get an estimate of how many travelers have been displaced, but the final tally will no doubt be enormous. Insurance companies report that they are being deluged with queries and calls for help. An article in the New York Times tells us that trip insurers are looking at an event that will cost millions.

“While there can be some exclusions, companies have typically covered nonrefundable prepaid travel that can pay stranded passengers $150 to $250 a day for a maximum of $1,500.”

InsureMyTrip.com offers a brief note about Volcanoes, airport closings, and trip insurance, as well as a longer release about how trip insurers are aiding stranded travelers.
More resources
The Insurance Information Institute offers an overview of the various types of trip insurance. A prior blog post featured a Travel Insurance Quiz. Also see CNN’s article:6 Tips to avoid travel insurance fraud