Travel Insurance vs Volcano

All my bags are packed I'm ready to go
I'm standin' here outside your door
... Don't know when I'll be back again.
- lyrics from "Leaving On A Jet Plane"

If you're worried about flying to Europe right now and are thinking about buying travelers insurance, "just in case" the flight is cancelled because of Iceland's Eyjafjallajokull volcano - forget about it. The Wall Street Journal reports that the volcano is excluded from all policies purchased on or after April 13.

"It’s called the theory of the burning house. If your house is ablaze, you can’t go out and quickly buy homeowners coverage. In travel, as soon as a storm or event is known, you can buy all the insurance you want but it won’t cover those “known’’ events. Once a hurricane is named, most policies won’t cover it
if the insurance was sold after the moment the storm was identified." - WSJ

The WSJ points out that even if purchased before April 13, travel insurance may be of limited use. When airlines refund tickets for canceled trips, there’s no claim with insurers. Many policies have limits on daily expenses if you are stranded away from home. If you can’t get to a hotel that you prepaid, insurance may not kick in because the hotel isn’t “uninhabitable.’’ It's your fault for not finding another way to get to it.

Travel insurance rarely covers your cancelling due to fear of unsafe travel or unsafe conditions—for example fear of terrorism is covered only if the attack happens in your destination city. Everywhere else is safe to fly. Same with hurricanes – your resort may have to be declared uninhabitable before your insurance would cover you. It's not enough that your resort was hit hard, barely functioning, and won't be the dream vacation you paid for.

Bottom Line

Read insurance policies carefully before buying. What you have in mind may require a more-expensive “cancel for any reason’’ policy that will cover pre-existing medical conditions, family emergencies, etc. Check the daily limits for reimbursing hotels, lost luggage and other expenses.