Speaking to the market penetration of travel insurance, Mr. Grace said about 30 percent of travelers carry such coverage.

William Beardsley, senior vice president, Travel and Accident Division for Arch Insurance Group, said take up may be higher for Americans traveling overseas.

For Europeans, he said, take up is much higher--at approximately 95 percent.

One reason for the higher take up among Europeans, Mr. Beardsley noted, is that they often do not have medical coverage when they travel abroad. For Americans, he said, their health insurance generally follows them outside the U.S.

Speaking to what may be covered by travel insurance policies, I.I.I. spokesperson Loretta Worters on Friday outlined for NU Online a few instances where travel insurance might cover travelers for the volcano eruption and the delays caused by the resulting ash cloud. (http://www.property-casualty.com/News/2010/4/Pages/Business-Interruption-Aviation-Volcano-Claims-Success-Unlikely-.aspx).

Ms. Worters said, "Travel insurance policies will differ in this situation; there is no standard set of conditions which applies to a situation of this kind. Therefore customers should check their travel insurance policy, and speak to their travel insurer to understand what their individual policy covers them for in this situation."

Mr. Beardsley mentioned a segment that appeared yesterday on a national network where it was erroneously reported that there is no coverage for flights delayed or cancelled because of the volcanic eruption, and that travel policies do not cover acts of God.

Mr. Beardsley said that may be true for "loss of income" insurance for airlines.

Catastrophe modeler AIR Worldwide said yesterday that airlines generally do not have insurance coverage to compensate for this type of disruption, which fall under "act of God" exclusion clauses.

But Mr. Beardsley said this is not the case for travel insurance purchased by travelers.

He said coverage for Europeans may be different, but for Americans, trip cancellation and trip interruption coverages could be triggered by the ash cloud.

For cancellation coverage, Mr. Beardsley said any non-refundable deposits for airfare, hotel, etc. could be covered. Cancellation, he said, is a pre-departure coverage.

For trip interruption, Mr. Beardsley said travel insurance will pay for such things as extra meals and hotel accommodations while the traveler is waiting to come back to the U.S.

John W. Cook, president of QuoteWright.com--a website that allows consumers to compare travel insurance plans--said the ash cloud could be classified by insurers as either a "natural disaster" or an "adverse weather" event, and how it is classified could affect trip cancellation and interruption coverages.

"Under those coverages, some, but not all, companies include 'natural disasters' which cause your airline to cease operations to be a covered event," said Mr. Cook. But coverage may be limited, he said, if the event is interpreted as a natural disaster.

Adverse weather, he said, is a more common covered event when it causes an airline to cease operations for a specific time period--usually 24 hours.

"Coverage for travel delay and missed connection [two additional forms of travel insurance] is clearer," said Mr. Cook. "These coverages are also 'named peril' benefits, however the majority of plans include 'natural disaster' as a covered event."

Mr. Beardsley said the natural disaster trigger for cancellation coverage would kick in if accommodations at the travel destination are uninhabitable, which did not happen in this case.

But he said most policies in the U.S. are written in a way that would define the ash cloud--not the volcanic eruption itself--as adverse weather.

According to AIR, property and agricultural damage, tourism impact, and imports and exports are not expected to cause concern.

AIR said, "In addition to the costs to the airline industry, the major source of loss may be to economic output from people unable to return to work, estimated at around $500 million a day by an economist from the Royal Bank of Scotland. Unless the restrictions remain in place for a long time, however, the impact on economic growth is expected to be minimal."