Does your travel insurance cover the airline going out of business? The recent liquidation of Monarch Airlines has seriously made travellers aware of just how important it is to double check the small print of your travel insurance policy when going abroad.
Unfortunately for many travellers who booked with Monarch, they found that their insurers would not pay up when the airline collapsed, either before they travelled or while they were abroad. In fact, it has been estimated that two out of every five Monarch passengers would have travel insurance policies that did not cover the airline going broke.
If a travel company cancels flights but remains in business, they can be legally forced to pay compensation to their passengers. However, this law does not apply to an airline that has gone out of business; so, if you do not have recourse through your credit card company or travel agent, your only hope of compensation is through your travel insurance.
There are two types of protection from airlines collapsing that certain types of travel insurance policies cover. The most common is “scheduled airline failure insurance, which covers your costs if an airline goes bust. Also known as “Safi”, this type of coverage can be used if your airline folds when you are abroad or before you have set off.
If your travel insurance does not include this protection, another clause could be “supplier failure”. Not only does this cover your costs if your airline goes out of business, it also covers you if any of your providers fail, including your hotel. As it covers a wider range of eventualities, “supplier failure” is usually more valuable to those travelling abroad.
When you are shopping around for the best travel insurance policy to suit your needs, make sure you check if these deals cover the possibility of the airline going out of business. While these policies are generally a little more expensive, the peace of mind that you will be covered for every eventuality is well worth the extra cost.
Compare travel insurance at Cuuver, today.
This should not be construed as advice and is guidance only.