With the rapid increase of airline bankruptcies and cancelled flights, many travelers are relying on travel insurance to protect their investment. Travel insurance provides many benefits, one of which is coverage for the bankruptcy or financial default of a travel provider; including airlines, cruise line, or tour operators.
This travel insurance coverage will provide reimbursement for cancelled travel plans when a travel supplier declares bankruptcy.
Not all travel insurance policies provide this coverage, it depends on the plan. Some provide great coverage for this, some have several conditions that must be met, and other do not provide coverage at all.
Here are 4 essential steps to buying financial default coverage
1. Check your policy to make sure financial default coverage is provided
There are many different travel insurance companies, and each company has several products. Financial default (or bankruptcy) is not covered by all travel insurance policies. Read the policy brochure carefully, or even better the actual policy certificate. Look for a section regarding coverage for bankruptcy or financial default.
The best way to find the policies with the best coverage for financial default is to use a comparison engine. At the end of this article, you will find a table outlining the financial default coverage for all major travel insurance companies and their products.
2. Check the list of “Covered Suppliers” to make sure your airline or tour operator is covered.
Some travel suppliers might not be covered for financial default reasons. Travel insurance companies will define the specific travel suppliers that they will cover for financial default. Look for a “Covered Supplier List” when purchasing travel insurance, and check it to make sure your airline, cruise line, or tour operator is listed.
The travel insurance company must define the specific companies due to the shear number of different providers, and the questionable stability of some of them. It isn’t hard to start a “tour company”, and many of them go out of business.
3. Buy travel insurance as soon as possible
Regardless of the financial default coverage, it is always recommended that you purchase your travel insurance policy as soon as possible to take advantage of all the coverage. This means buying it when you make you first trip payment. There are many reasons to purchase your travel insurance plan as early as possible, and it is specifically important with financial default and bankruptcy coverage.
Most companies require that you purchase the policy within a certain time period; often within 10-15 days of your first trip payment, or within 24 hours of you last trip payment. Check the details of your policy, or consult the table at the end of this article.
The travel insurance company does this to make sure travelers don’t buy coverage after they know about the bankruptcy.
4. Be aware of the “waiting period” for financial default coverage in many travel insurance plans.
Another line of fine print refers to the “waiting period”. This is a period of time after the purchase of your policy when a financial default would not be covered. For example: if a company has a 10 day waiting period, but the travel provider declares bankruptcy 6 days after the effective date of the policy, you would not be covered.
Again, this is done to prevent uninsured travelers from buying coverage after the fact. Oftentimes, the imminent bankruptcy of a company is known to the general public. Without this waiting period, you might hear that your provider is about to declare bankruptcy, and you could buy the insurance hoping to be covered. The purpose of trip cancellation insurance is to cover sudden, accidental, and unknown events. This is why insurance should be purchased as soon as possible, so you can be covered for the longest period of time.
Financial Default Coverage Matrix
Here is a listing of most major travel insurance companies and their individual plans, as well as the financial default coverage provided. Note: It is also important to double check your policy when purchasing; simply use this table as a starting point (see How to Compare Quotes with a Travel Insurance Comparison Site)
|Company||Plan Name||Financial Default Coverage|
|Access America (now Allianz Travel Insurance)||Deluxe||Selected Carriers- 7 day wait if purchased with 14 days of First Trip Payment|
|Access America (now Allianz Travel Insurance)||Classic||Selected Carriers- 7 day wait if purchased with 14 days of First Trip Payment|
|Travel Guard||Cruise, Tour, & Travel||14 day wait- if purchased within 15 days of First Trip Payment|
|Travel Guard||Essential||Not Available|
|Travel Guard||Essential Expanded||14 day wait- if purchased within 15 days of First Trip Payment|
|Travel Guard||My Travel Guard||Optional|
|Travel Guard||ProtectAssist||14 day wait- if purchased within 15 days of First Trip Payment|
|American Express||Global Travel Shield Classic||7 day wait|
|American Express||Global Travel Shield Deluxe||7 day wait|
|CSA Travel Protection||Freestyle||Not Available|
|CSA Travel Protection||Freestyle Luxe||14 day wait- if purchased within 24 hours of Final Trip Payment|
|Global Alert!||Preferred||15 day wait- if purchased within 15 days of First Trip Payment|
|Global Alert!||Preferred Plus||15 day wait- if purchased within 15 days of First Trip Payment|
|HTH Worldwide||Trip Protector||14 day wait- if purchased within 24 hours of Final Trip Payment|
|HTH Worldwide||Trip Protector Preferred||14 day wait- if purchased within 24 hours of Final Trip Payment|
|International Medical Group||Patriot T.R.I.P.||30 day wait- if purchased within 14 days of First Trip Payment|
|International Medical Group||Patriot T.R.I.P. Elite||30 day wait- if purchased within 14 days of First Trip Payment|
|M.H. Ross||Enhanced||15 day wait- if purchased within 15 days of First Trip Payment|
|M.H. Ross||Enhanced Extra!||15 day wait- if purchased within 15 days of First Trip Payment|
|RBC Travel Protection||Deluxe||7 day wait- if purchased within 15 days of First Trip Payment|
|RBC Travel Protection||Standard||Not Available|
|Seven Corners||RoundTrip||Varies by State|
|Seven Corners||RoundTrip Choice||10 day wait|
|Travel Insured||Worldwide Trip Protector||14 day wait|
|Travel Insured||Worldwide Trip Protector Gold||14 day wait|
|Travelex||TraveLite||14 day wait- if purchased within 21 days of First Trip Payment|
|Travelex||Travel Plus||14 day wait- if purchased within 21 days of First Trip Payment|
|TravelSafe||Premier||15 day wait- if purchased within 15 days of First Trip Payment|
|TravelSafe||Vacation Insurance||15 day wait- if purchased within 15 days of First Trip Payment|
|TruTravel Insurance||First Class||10 day wait- if purchased within 21 days of First Trip Payment|
|TruTravel Insurance||Super Saver||Optional|
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