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Travel Insurance Explained: Financial Default cover

Many people worry that the airline that they are travelling with will go bust before or during their vacation, leaving them out of pocket and in the lurch. Some, but not all, travel insurance policies offer compensation in the instance of an airline going bankrupt, so it is worth checking the details of a policy before you commit to it.

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 travelling with, as they cannot pay out on a claim if they are bankrupt themselves.

Financial default cover is usually only applicable to airlines, cruise lines, and tour operators, and not to independent travel agencies, so if you are booking through an agent, make sure that they are licensed through a guarantee scheme such as ABTA.

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.

There may be a waiting period specified in the insurance contract, for example the travel supplier may have to go bust more than a week after you bought the insurance policy for it to be valid. This is to prevent a rush of late applications for insurance in the wake of the news that a travel supplier is about to go under.

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.

So if you feel that you need financial default protection, then make sure to buy your travel insurance as early as possible, read the policy documents thoroughly, and make sure that you buy it from an independent party, rather than direct from your travel supplier.

Article Source: http://articlesltd.com

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.

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