Thousands of Australian passengers stranded by the Icelandic volcano eruption should be covered under travel insurance, but exposure to the freak event is far greater for the airlines’ insurers.

The Eyjafjallajökull glacier erupted on April 14, shutting down airspace across the UK, Scandinavia and parts of northern Europe.

Flights to and from the UK and across Europe have been cancelled since April 15, causing airline companies estimated losses of $US200 million ($216 million) a day, according to the International Air Transport Association.

Airports up to 2000km away from the volcano have been closed, but test flights out of the UK today will give airlines some hope of a return to normal.

Airliners cannot fly near the volcanic ash as it may cause engines to shut down. This happened in 1982 when a British Airways flight to Sydney encountered ash from a volcanic eruption in Indonesia, causing all four engines to fail. The plane plummeted more than 2000 metres before some engines restarted.

The Centre for Asia Pacific Aviation says 6 million passengers worldwide have been affected by the eruption. The airlines will shoulder much of the economic fallout, as most do not include business interruption costs in their insurance policies.

Those that do have business interruption cover may be subject to a natural hazards clause.

UK crisis advisory group Lewis PR says the European travel industry has lost more than £1 billion ($680 million) resulting from cancelled flights as well as empty hotel rooms and cruise liners.

However most Australian passengers who took out travel insurance prior to their trip should be covered for basic expenses.

AAMI Corporate Affairs Manager Mike Sopinski says the insurer covers customers for “unforseen circumstances arising from natural events, including volcanic eruptions”.

“Cover is provided to customers through the AAMI travel policy regarding flight cancellations, flight delays and interruptions along with any cancelled hotel accommodation,” he told insuranceNEWS.com.au.

“We are advised that most airline carriers are currently accommodating customers with alternative flight arrangements and emergency accommodation where required.”

AAMI expects the cost of insurance claims to be negligible.

Allianz-owned Mondial Assistance says any travel insurance policies purchased before April 16 include cover for cancellation and accommodation expenses as a result of the volvano.

About 9000 Qantas passengers have been affected.

While Australian passengers who took out insurance will be reimbursed for most expenses, Europeans caught up in the flight seizure may not be so lucky.

UK travel policies differ in the coverage they offer. While some cover claims for unused accommodation, others only cover events such as injury, illness, death, or travel interrupted by “damage to the family home”.