I've outlined in another thread the that if one books a "pre-arranged package" then one is entitled to a full refund -nothing else if cancellation is due to force majeure.
(A pre-arranged package is one in which the package organiser has already bought the flight, hotels,cruise places, coach-tour etc etc and outs them togetehr for sale ,usually in a brochure).
If one books different elements with a travel agent that have not been pre-arranged -which I imagine is your case - then in cases of force majeure you have no rights.
That is, if the travel company put together different flights and hotels as per clients requests then its bad luck for the clients.
Its confusing a if you google Package Holiday Act it may make it clearer.
However, having said all that - I frankly cant imagine that Trailfinders really lost money on the hotels. The internal flights maybe but not the trans-atlantic ones -which certainly they should not pay.
I am a midget compared to the giant that is Trailfinders and I only had a few clients who had booked hotels abroad (besides those who had booked tour operator packages) but in every case not one hotel charged me for the clients who could not get there due to the ash crisis.
So i rebooked them all at a later day -most have now gone - with no loss to them on flights or hotels, just exhaustion on my staffs part.
However, the hotels did have the right at the last moment to say "sorry cant refund" but, other than deducting a day or so, it would have be awful to charge for every day in the hotels,
I really believe Trailfinders will rebook at a "reasonable" loss (internal flights and maybe a day or so in hotels).
Regarding the insurance company -no idea; I thought I sold a great policy ,covered "natural catastrophies" but named them -flood, earthquakes, storms,avalanches - and did not name volcanoes. in exclusion clauses it excludes "anything not specifically named".
I think 99% of people -maybe 100% got caught out there and I feel annoyed about, except of the eighty odd people who booked half stuck abroad half couldn't get outwith me not one actually lost money, even though they were greatly inconvenienced, often upset, and some had to cancel.
Am only writing these posts to get anxiety of last week of my chest -then back to sleep !!