Travel Insurance Explained: Financial Default cover
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.
Financial default cover usually only applies if an airline has completely ceased trading due to financial reasons. Even if a policy includes this as standard, it may only apply if you buy your insurance less than a couple of weeks after you book your flights.
Some of the less expensive travel insurance packages do not offer insurance against airline bankruptcy as standard, so it is well worth your while checking the exact wording of the terms and conditions of your policy before committing to buy.
Insurance cover of this type only applies to travel suppliers such as airlines, cruise lines, and tour operators. So if your travel agency goes under, you will not be protected unless they are signed up to a customer guarantee scheme of some sort.
If your holiday is made up of several different journeys with different travel suppliers, for instance, if you are flying out to the Caribbean to board a cruise ship there, then you will only be covered if you miss out on the whole trip due to the bankruptcy of one travel supplier.
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.
Also, you should check whether the underwriter of the policy has a list of approved travel suppliers. If they do, and your travel supplier is not on the list, then you will not be covered if they go bust. Do not assume that most reputable suppliers will be on the list, as these lists can be surprisingly short.
The best policy is to buy your insurance from an independent supplier as soon as you can after booking your holiday, and make sure you check the small print before you sign.
1stoptravelinsurance.co.uk provides cheap annual travel insurance with cover to travel as many times as you like for up to 45 days at a time.