Thousands of passengers from across Northern Ireland are out-of-pocket and inconvenienced by the volcanic ash disruption of air traffic. But with transport returning to normal, there is widespread confusion about consumers’ rights to recover the extra costs they incurred. At least one major insurer is refusing to meet any claims arising from the chaos.
Minimum levels of compensation are laid down by EU law for travellers within the European Union, those who fly using an EU airline, or who use a charter flight leaving from, or going to, an EU country. Airlines are obliged to provide meals, refreshments and hotel accommodation and pay for some phone calls. Where flights are cancelled, an airline must either offer an alternative flight, or refund the fare.
Airlines may also have to provide financial compensation, though not if the incident is classed as caused by force majeure (‘an unforeseeable circumstance that prevents someone fulfilling a contract’, according to the Oxford English Dictionary). Some airlines initially argued they would not have to provide compensation because of this get-out – notably Ryanair – but all seem to now accept their legal obligation to provide redress. Airlines stress they will only compensate customers for reasonable expenses and where these are fully receipted.
But while airlines are screaming about the cost of compensation for meals and accommodation, many travellers incurred substantial other losses – such as unused apartments and hotels at their destination resort. Here travellers must look to their travel insurance policies – providing they were sensible enough to take out travel cover. And even some of those who took out policies may find their claims rejected.
Not paying out
Scott Mowbray of Virgin Media confirms that his firm is at present not processing claims. “Our underwriters, Europ Assistance, are saying that natural disaster is not included in the policy document, so they are not paying out on it,” he explains.
Nick Starling, the Association of British Insurers’ director of general insurance and health, says that many other insurers are taking a more helpful approach. “While a volcanic eruption is not a specific insured event covered in insurance policies, some cover for delay and travel abandonment may be available, depending on the level of cover purchased by the policyholder and the terms and conditions,” he says. “This will vary as there is no standard travel insurance policy. Payment for delay, whether outward or return, is usually a fixed amount per delayed period up to a maximum figure, not an open-ended sum.
“It is especially important to talk to your insurer to determine the types of expenses which can be covered before you incur them. It is an urban myth that insurers are relying on an ‘Act of God’ clause to get out of providing cover for this event. Where this event is not specifically covered by your insurer, some are offering ex-gratia payments for customers stranded abroad.”
Several leading providers of travel insurance have made clear they will meet claims relating to delays and cancellations – some arguing they are doing so on a goodwill basis. Those processing claims include BIBA Protect; Barclays Travel Insurance; Co-operative Insurance; Direct Line; Post Office Travel Insurance; and Halifax and other parts of the Lloyds Banking Group.
Saga has specified the type of additional costs it will allow under its travel policies. Where flights are delayed for more than 12 hours, Saga travel insurance customers will be given compensation of £35, plus £15 extra for each 12 hours, up to a maximum payment of £215. But passengers must have checked-in for flights to be eligible for the payments. Associated unused but prepaid costs for services such as accommodation and car hire can be claimed for. But anyone stranded who hires a car to return home will not recover their costs through the policy.
Credit card lifeline
In a limited number of circumstances, passengers may obtain recourse from credit and debit card issuers. Under the Consumer Credit Act, providers of credit are jointly liable with the trader for the supply of goods and services costing over £100. So if an airline went broke, or was otherwise unable or unwilling to make a refund for a flight that was cancelled, then a credit card issuer can be required to repay the costs.
Visa stresses that customers must in the first instance seek redress directly from the airline and only if they fail to recover their costs should they contact their card issuer. Visa provides similar redress to consumers using its debit cards, but does so on a goodwill basis.
Customers who use Maestro/MasterCard debit cards do not normally benefit from the same arrangement – contrary to some media reports. The exception is where someone buys goods or services online from an overseas website, in which case the costs should be recoverable. A spokesman for MasterCard says that where there is a dispute about the recovery of a payment, the cardholder should contact the card issuer.
What the volcanic ash crisis illustrates very effectively is the benefit not only of buying travel insurance, but also checking that the cover provided is adequate. Not surprisingly the comparison website Moneysupermarket.com reports enquiries for travel insurance have risen by 27% following the onset of the crisis.
A Question of Money
Q. What cover should I obtain from a travel insurance policy?
A. Consumer advice agency Which? suggests that travelers obtain at least £2m in medical cover, including air ambulance where required; at least £1,500 in baggage and belongings cover; at least £3,000 cover for cancellations (including where the traveller cancels where a close relative falls ill); at least £1m for personal liability, where the traveller injures someone else, or damages their property; and a 24 hour emergency support line.