Will my travel insurance cover me?

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.

Before buying a travel insurance policy, make sure that you have a good look at the policy documents to see if they do indeed offer financial default insurance. Some of the more basic packages, and especially those offered by the airlines themselves, do not include this type of protection, so if the airline ceases trading for financial reasons, you will be left up the creek without a paddle.

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.

You will need to check your policy documents to find out if there is a waiting period before the default coverage takes effect. Some policies state that the financial default of the travel supplier must take place at least a week after you have bought the policy in order for you to be covered.

Most insurance underwriters have a list of airlines that they are willing to insure, so make sure that the airline that you are travelling with is on this list before you buy any policy, or else your financial default cover will be worthless.

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.

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.