Few travel policies cover airline failure
Wednesday, 24 Sep 2008 16:00
The failure of XL led to stranded passengers
Only a handful of insurers cover the bankruptcy of an airline or holiday company as standard on their travel policies, according to moneysupermarket.com.
The failure of XL, leaving hundreds of passengers stranded, highlighted the risk for travellers.
At the time, the ABI warned that airline failure is not usually covered as standard in insurance policies.
Despite much coverage of the plight of holidaymakers stranded by the failure of XL and Zoom, this is still the case according to price comparison site moneysupermarket.com.
Moneysupermarket found only four providers who would pay out in the event a travel company goes bust: Insurefor.com, Swiftcover, Karma Insurance and the Post Office.
Several others, including Swinton and budget airline Ryanair and will also offer scheduled airline failure cover as an add-on for £1, while easyJet will offer it as standard.
Peter Gerrard, head of insurance research at moneysupermarket, said: "It's surprising to see there are only a handful of insurers at the moment offering cover for scheduled airline failure as standard; don't assume you will always be covered - it's important to read the small print of your policy.
"As the significance of this type of cover becomes more apparent, the good news for travellers is in the future more insurers will recognise the value of scheduled airline cover and add it to their policies, albeit at a premium."
Those booking through a travel agent will be covered through the industry's Atol scheme, while those who booked their flight using their credit card can also claim their money back from their provider.
However, fewer people are aware that Visa debit cards also afford some protection against bankrupt firms, but it must be claimed back within 120 days.