Volcano insurers hide behind 'Act of God'

Travellers have accused insurance companies of using an 'Act of God' defence to avoid paying compensation for personal losses from the volcanic cloud disruption that could top £20m.

Waiting game: Flyers suffer uncertainty over insurance payouts.

Those who have booked flights as part of a DIY package holiday are being offered a refund of their ticket price by their airline, however there is no right to compensation. Thousands have turned to their insurance company in the hope that they can claim for other losses resulting from flight cancellations, such as car and hotel bookings.

The lack of a standard policy for payouts on damage caused by volcanoes is likely to cause confusion for thousands of 'ash victims'.

Many travellers have been told by their insurers that they must wait at closed airports on the off-chance that flights are reinstated, or else risk losing any insurance payout.

Emma and Eddie Argyle, who are in their 30s, were forced to make alternative arrangements for their skiing holiday after their flight to Geneva was cancelled and their insurance firm refused to pay.

Mrs Argyle said: 'We rang our insurance company and they said it was an "act of God", so they won't cover us - we're stuffed.'

However, a spokesman for the Association of British Insurers said: 'There is no "Act of God" exclusion in insurance policies. The term is usually used in the legal defence sector on the grounds that damage for which you are held liable was caused by circumstances beyond your control. Insurance policies do not contain such an exclusion.'

He added: 'The policy will set out what is insured and what the main exclusions are. If loss occurs from an event covered, then the insurer will pay out, in accordance with the terms and conditions.'

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