Volcano insurance cover still troubling NZ travellers

New Zealand travellers could potentially find themselves out of pocket if volcanic ash causes authorities to close airspace again.

Some insurance companies are refusing to pay out on future claims against disruption to travel from the Icelandic volcano because it is deemed "an already occurring event".

Insurance Council of New Zealand chief executive Chris Ryan said this week that people needed to check with their individual insurer to see if this applied to them.

Tauranga woman Alison McCulloch, who is currently in Ireland, told nzherald.co.nz she felt she had been "hung out to dry" after finding out her insurer would not pay out should her travel plans be disrupted from the Icelandic volcano on her return home.

McCulloch said she delayed booking her flight home because she had not been able to finalise her travel plans until recently, and had already left New Zealand when the volcano erupted.

She said she was told by Flight Centre - whom she booked her insurance through - that the volcano was deemed an "already occurring event" and that she would not be covered for her journey home.

A Flight Centre spokesperson said if someone flew out tomorrow they would not be covered by the insurance company Travelsure for volcano delays.

But once all claims from the first major ash disruption were processed, any further interruption would then be covered.

This would be seen as a "second event" and therefore "unforeseen", she said.

Southern Cross Travel Insurance chief executive Craig Morrison said it had received claims of more than half a million dollars from people whose plans were disrupted by the volcanic ash, but only insurance purchased prior to April 15 eruption would be covered.

Future claims related to the same volcano would not be covered and customers needed to understand this risk when booking a trip.

See the company's advisory here.

McCulloch said she was irked by the lack of cover and said insurers should be doing more for travellers, even if it was simply to offer cover for disruption to travel plans from the volcano at a higher premium.

"It just feels like they leave you hanging out there to dry."

Morrison said Southern Cross was not considering offering this kind of cover because insurance was not designed to cover known risks.

House of Travel retail director Brent Thomas said the company had fielded a number of enquiries from concerned passengers about cover should the volcano erupt again.

Thomas said he recommended passengers took out travel insurance the moment they booked an airfare so they had the best cover possible.

"A lot of European bookings are for well in advance and people don't know what circumstances might change which means they cannot travel."

"Once an event has occurred, it is very difficult nigh impossible to get insurance for that event," he said.

Consumer New Zealand consumer adviser Maggie Edwards said many exclusion policies did not provide for an already occurring event such as the Icelandic volcano, civil unrest or terrorism.

"You do have to read your terms and conditions really carefully and it would be a question of ringing around insurance companies to see if they would cover you."

Edwards said it cost some budget airlines in Europe more to look after passengers during the recent closure of airspace, than it did for the airfares, therefore it was understandable that insurers would try to limit their liability.

"There is no obligation for insurance companies to provide cover for events such as this."