Allianz and QBE have said that they will cover all reasonable costs as a results of the Icelandic Volcano: article on SMH
Other insurance companies may provide cover. Check directly with your insurer and find out what they are prepared to cover. Otherwise you may find yourself out of pocket substantial hotel and meal costs.
Remember to keep all receipts, get written proof from the airline that you are affected, and do all you can to minimise the claim.
If you are still looking to take out a travel insurance policy then try Travel Insurance Reviews Australia.
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