The Week Unzipped: Will volcanic cloud have a silver lining? Check your insurance

HOLIDAYMAKERS whose travel plans were disrupted by the volcanic eruption in Iceland may not be fully covered by their insurance policies.

The Association of British Insurers has warned that volcanic eruptions are not always covered for cancellation and delay, because many policies will not pay out in the event of a so-called 'Act of God'. But policies differ, so it's worth checking the small print.

If your flight was cancelled, most airlines will offer a full refund or an alternative flight and have a duty of care to offer stranded passengers hotel rooms and food.

However, travellers may still be left footing other bills for losses incurred by delayed flights such as cancelled hotel room bookings or car hire.

If your flight is grounded and you decide not to travel and cancel your entire holiday, your insurance will not compensate you for your loss of holiday, as disinclination to travel is not covered. However, most will return your premium on a single trip policy.

You should be offered alternative flight arrangements by your airline, and those booked on a package holiday should be similarly protected by the holiday industry bond.

Where customers are still not covered, some insurers have promised they will pay out losses incurred from flight cancellation. A spokesman for RBS says customers insured by Direct Line, Churchill, NatWest and RBS may be able to also claim for unused accommodation.

Similarly, Saga says it will honour all claims of this nature as long as customers provide a letter from the airline.

If you have been left out of pocket you should contact your airline, travel company and insurer urgently, having read the small print of the various contracts carefully.

There is no standard set of conditions which applies to a situation of this kind.

Plastic fantastic

Cash transactions are on the decline as the popularity of paying by card increases, according to research from the Payments Council. The report, 'The Way We Pay 2010' highlighted the changes over the past decade including the rise of internet banking and the growing trend for cards over cheques or cash.

While six in ten transactions still involve cash, 80 per cent of these are for amounts less than 10. The Payments Council predict consumers will opt to pay with cash in less than half of all transactions by 2015.

Right on queue

The Nationwide Building Society is to stop allowing some customers making withdrawals of less than 100 over the counter. From 7 June, cash card holders requiring smaller amounts must use a cash machine.

The building society hopes the change will reduce queues in branches. The Nationwide claims that about a third of all counter transactions are carried out by less than 8 per cent of their customer base. Debit card holders or those using a passbook can still withdraw any amounts at the counter.

However, Nationwide is sending another group of customers back to the cashier. The society is ending the use of self-service machines for the paying-in of cheques of more than 1,000. The current limit is 10,000. This is to prevent the depositing of fraudulent cheques which staff are more likely to spot. Nationwide is introducing a 10 charge for drafts of less than 1,000 obtained at the counter.

These changes do not effect Dunfermline customers, whose society was acquired recently by the Nationwide.