Importance of travel insurance this winter

PUBLISHED: 15:58 09 April 2010 | UPDATED: 22:01 21 February 2013

The recent collapse of another airline has spelt more holiday misery for thousands of travellers. Make sure you know your rights should you become a victim of such a development, says Adam Aiken...

The recent collapse of another airline has spelt more holiday misery for thousands of travellers. Make sure you know your rights should you become a victim of such a development, says Adam Aiken.

The importance of making sure your holiday flights are properly covered in the event of financial failure was thrown sharply back into focus recently with the collapse of a major budget airline.

Flyglobespan, based in Scotland but which has operated out of airports around the UK, went into administration in December, leaving thousands of people stranded overseas or holding tickets for future flights that wont now be honoured.

Ryanair, Easyjet, Virgin Atlantic and Flybe are among the operators offering to help repatriate holidaymakers, while insurers say it is important that people speak to their brokers and check their small print.

In practice, its likely everyone will get back home without too much trouble, but doing so could prove to be an expensive headache for many.

As well as being a shock for people directly affected by the Flyglobespan collapse, the episode provides a warning for all other travellers; a few simple checks at the outset can help mitigate much of the misery should the worst happen to you. Rochelle Turner, from Which? Holiday, says: With yet another airline collapsing, leaving thousands of Brits stranded either overseas or with future flights that they cannot take, its really important that people take steps toensure they are protected should a similar incident occur in the future.
So, where do travellers actually stand?


Travel operators licences and bonds

In the case of Flyglobespan, about 1,100 passengers now abroad on packages with the companys tour operator division are protected by the Civil Aviation Authority-run Air Travel Organisers Licensing (Atol) system.

Any Atol-backed holiday package comes with the security of knowing that alternative arrangements will be made in the event of your operator coming unstuck financially. So, if youre buying a package holiday, check if youll be covered by Atol.

Meanwhile, flight and holiday companies can be covered by the Association of British Travel Agents (Abta) scheme. Travellers on an Abta-bonded trip will also be covered should their airline go bust.

A message on the Abta website yesterday said Globespan was not one of its members, Even so, it is another safety net you might think worth considering.


Travel insurance

It goes without saying that no one should travel without some form of insurance cover, but dont assume your policy will cover you should your flights be cancelled because of financial failure.

Steve Williams, head of travel insurance at Confused.com, says many people would be surprised to find out that the financial collapse of an airline is not covered by most mainstream travel insurance providers. It looks like the 2009 festive getaway will be one to remember for all the wrong reasons, he said.

The difference in policy terms
and conditions demonstrates the importance of people checking the small print at the point of purchase and assessing whether or not the cover offered is adequate for their needs.

The British Insurance Brokers Association (Biba) says it is important for travellers affected by an airlines collapse to contact their insurance providers.

It says there are policies available that offer the necessary protection, and the collapse of Flyglobespan has underlined the need for people to spend time arranging the right cover.

This really highlights the importance for travellers to focus on the cover within their policy and not just the price, especially independent travellers who are not assisted by [Atol or Abta] package holiday protection, said Graeme Trudgill, Bibas technical and corporate affairs executive.

One mainstream insurer that does offer such cover is Direct Line, and the company was unsurprisingly quick to make that known after the developments with Globespan.

Jennifer Thomas, of the insurer, said: Holidaymakers are understandably looking to spend less on travel these days, and booking directly with airlines and hotels can be a good way of getting more while spending less.

However, this means that it is now more essential than ever to have insurance in case these firms fail, as there is no protection from schemes such as Atol or Abta if booked direct.

With our updated travel insurance policies, our customers can now travel with increased peace of mind knowing that they will be covered in the unfortunate event of a suppliers collapse.


Credit cards

The other trick is to make sure you have paid for all or part of your flights by credit card.

Under Section 75 of the Consumer Credit Act, a credit card company is jointly liable for goods or services costing between 100 and 30,000.

And the good news is that, even if only part of the purchase has been made on the card, the issuer is jointly responsible for the entire product in this case, an airline ticket. So, if you buy tickets worth 500 and use a card to pay for, say, 150 of the bill, the card company is jointly liable for the entire purchase.

Flyglobespan passengers who used their credit cards to book their tickets should find they are covered by their card issuers.

Should such a thing happen to you while youre abroad, it may be that you will have to make your own arrangements to get home and then claim back your expenses later. But if your travel operator fails before you have travelled, it might

be worth calling the credit company first.

In the case of most business failures, its the passengers who are normally at the back of the queue as far as getting their money back is concerned.

So, while you will need to lodge a formal claim with the administrators, it is likely to be your card company that ends up reimbursing you.

Some people dont like using their credit cards to book holidays because many airlines and tour operators sneakily charge a fee for paying by plastic.

But, as recent events have shown and as will no doubt be the case again soon paying a relatively small fee for the privilege of using a credit card can pay handsome dividends should your dream holiday bite the dust.


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