Will My Travel Insurance Cover Me If My Airline Goes Bust?

If you are worried that the airline you are travel ling with will go bankrupt before or during your holiday, you may want to get a travel insurance policy that offers financial default insurance. However, not all travel insurance policies offer this as standard, and some only offer it under certain conditions, so you may want to check the small print on your policy documents before signing them.

A travel insurance policy which includes financial default cover will only pay out if an airline has completely ceased all operations due to bankruptcy proceedings. There may be a number of conditions attached to this type of cover, so it is important to make sure that you know what you are getting into.

It is worth investigating the small print of your travel insurance policy before you buy, as some of the more stripped down packages do not offer financial default cover as standard. Also, steer clear of buying insurance directly from the airline you are travel ling with, as they cannot pay out on a claim if they are bankrupt themselves.

This type of cover will not protect you if your travel agency goes under, as travel insurance policies usually specify that financial default coverage only applies to travel suppliers, such as tour operators, airlines, and cruise lines, and not to the company that sold you your travel insurance.

Some package holidays use a combination of different travel suppliers, which can complicate the issue. Most financial default policies will only pay out if you have to miss your whole trip as a result of the bankruptcy of a travel supplier, so if you are flying out to the Caribbean to catch a cruise liner, and the airline that is taking you out there goes under, causing you to literally miss the boat, then you will be entitled to full compensation.

In order to prevent a rush of insurance orders following the announcement that a travel supplier is in financial difficulties, there is usually a waiting period written into the insurance policy. This can range from a few days to a few weeks between buying a policy and the travel supplier declaring bankruptcy.

Do not assume that every travel supplier will be covered by a financial default insurance plan, as most underwriters have what is called a white list of approved suppliers which you should check before committing to a particular policy.

To sum up, make sure you get your travel insurance sorted as swiftly as possible after you have booked your trip, check the small print, and make sure that you do not buy insurance directly from your airline or travel agent.

Source by Dominick Davis

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