As Ryanair launches a massive seat sale offering one million flights from £4.99, travel insurance companies are warning all air passengers to check the small print of their insurance policies.

The huge sale follows Ryanair’s recent PR catastrophe, in which the low-cost airline was forced to cancel 2,100 flights, affecting the travel plans of 315,000 customers. Despite Ryanair refunding or rerouting affected passengers, many have had their travel plans disrupted and may struggle to claim back lost expenses as a result.

Under EU flight delay legislation, passengers who have their flight cancelled are entitled to receive a full refund or choose an alternative flight. This legislation also covers “out of pocket” expenses - direct costs incurred from the delay of a flight, such as the cost of staying at an airport hotel and any meals eaten while waiting for an alternative flight. Any passengers who receive less than 14 days notice of the cancellation can also claim compensation.

However “consequential losses”, costs such as other flights, hotels that have already been paid for and other expenses such as excursions or events, are not covered under this legislation. Despite pressure from consumer rights groups, airlines are not obliged to pay for them, and they are not necessarily covered by travel insurance.

Research by the advisory website Travel Insurance Explained found that although the majority of standard policies do not cover consequential losses, seven out of 10 British travellers assume their travel insurance covers the cost of rebooking a missed flight, as well as all connected travel and accommodation expenses.

“The majority of people buy travel insurance by price,” said Fiona Macrae of Travel Insurance Explained. “Standard policies won’t cover any expenses like pre-paid hotels, car hire, event tickets. Even if you have a cancellation clause with a limit of thousands of pounds, it might only cover cancellation under certain circumstances, such as illness.”

She added: “We’re saying travellers need to be looking for a policy that has a little bit of extra cover. When it comes to cancellations, the phrase to look out for is that they will cover you for any cause beyond your reasonable control.”

According to Macrae, this could cost as little as £9 extra for a family policy, or “about as much as you’d spend on magazines in the airport”.

Consumer rights group Which? has criticised Ryanair’s communication of compensation. It called on on the airline to promptly pay out-of-pocket expenses for those affected by rerouting as well as reasonable additional expenses. Which? has also flagged up the airline’s poor track record when dealing with compensation claims. In July, it analysed data from the Civil Aviation Authority (CAA) and found that where passengers took a compensation complaint against Ryanair to the regulator, Ryanair was in the wrong in 77% of cases. The airline then failed to pay out in 19% of cases despite being ruled against.

Alex Neill, Which? managing director of home products and services, said: “Ryanair’s approach to informing affected passengers about compensation falls woefully short. It is legally required to spell out compensation rules when a flight is cancelled and, in our view, has so far failed to do that, leaving passengers hunting around for information.”

She added: “This is another blow for the thousands of passengers who have already had to endure huge inconvenience as a result of this fiasco. The airline must now automatically compensate eligible passengers without them having to go through the additional hassle of making a claim.”

When it comes to claiming consequential losses, the Civil Aviation Authority said passengers may be able to claim - under the conditions provided for by the Montreal Convention - for damages arising from breach of a contract of carriage by air. It advises passengers to keep any receipts or other information in order to pursue such claims and to make their claim first to the airline. In addition, passengers should check their travel insurance policy or with their credit card company.

According to Ryanair, by Sunday alternative routings or refunds had been processed for over 97% of affected customers and the remaining 3% had yet to contact the airline. The airline could be forced to pay out over €20m in refunds and compensation as a result of the blunder.

Despite the scandal, it continues to aggresively market against other airlines, launching a one million seat sale this week, with flights to destinations across Europe, including Prague, Berlin, Mallorca and Barcelona for under £10 one-way.

• This article was amended on 26 September 2017. An earlier version quoted Alex Neill and said “he added”. This has been corrected to she added.