Volcano Insurance: Is there really such a thing as volcano insurance?

Actually, in the wake of air traffic disruptions and property damage related to the 2010 eruption of Eyjafjallajökull in Iceland, there has been some talk in the insurance industry -- not all of it serious -- about issuing volcano insurance, especially to airlines.

For homeowners and individuals, most damage from volcanoes is covered under home or renter's insurance. As always, check your policy or ask an insurance company agent if you really want to be sure (better yet, check your policy and ask your agent). Generally, home insurance covers fire damage, smoke damage, and other types of volcano-related havoc. The coverage is similar to what's covered for storm damage or fire damage.

However, standard home insurance policies often do NOT cover floods, earthquakes or mudslides, even if those events are volcano-related. Separate insurance policies exist for floods and earthquakes, or you may be able to add them to your homeowner's policy for an additional premium. Typically, if you live in an area known for floods or earthquakes, you'll need to have the extra coverage; if you live outside a flood/earthquake zone, then flood/earthquake damage might be covered on your standard home insurance policy, within certain guidelines. Either way, assume nothing. Read the fine print in your policy, and call your insurance company if it's unclear.