Insurer demands ash cloud test case after Icelandic volcano debacle in 2010

Thousands of holidaymakers stranded in last year's Icelandic ash cloud debacle are still waiting for a payout from one of the biggest travel insurance companies.

Europ assistance is calling on independent arbitrator the Financial ombudsman service to launch a test case, potentially in the high Court, to settle the matter.

This would rule on whether the ash cloud, which closed British airports for six days in April last year, should be defined as a weather event  -  and be covered by insurance policies  -  or a natural disaster and be outside their remit.

Ash cloud from last year's Icelandic eruption

Icelandic eruption: Thousands of holidaymakers were stranded in ash debacle

So far, the ombudsman has dealt with around 600 individual ash-related claims and has typically sided with the holidaymaker.

A test case could affect tens of thousands of claims.

Last week, Europ assistance decided not to appeal against a small claims ruling against it, and Insure and Go, where the judge ruled that ash was a weather event.

For a precedent to be set, the ruling must be made in a higher court. a spokeswoman for the Ombudsman says: 'A major insurer has requested a test case. The Ombudsman has given a clear indication of its view in the context of an individual case, where we're minded to uphold the consumer's complaint.

'We've asked the insurer why they believe a legal test case is necessary  -  particularly as we understand a case at the small claims court has not been appealed to a higher court.' a Europ assistance spokesman says: 'The matter of the volcanic ash plume claims is still before FOS and as such it would be inappropriate to comment.'

Thousands had claims refused or received partial payment from insurers such as Europ assistance, Axa and Virgin Money.

Others, including M&S Money and John Lewis, paid up.