Airlines these days are struggling. Every day people hear news about airlines reporting poor profits due to factors such as high gasoline prices, high labor costs and renewed threats of terrorism. One after another, airlines are lining up in front of Congress asking for subsidies or in front of bankruptcy judges asking for relief from creditors.
Traveling post-9/11 has propelled many individuals to rely more on travel insurance than ever before. Many travel insurance companies offer good, reliable coverage, including trip cancellation and emergency medical. But what happens if your trip is scheduled for several months from now and in the meantime your travel supplier (airline, cruise line, tour operator) declares bankruptcy? You may or may not be covered. It depends on the specific travel insurance plan you have.
For instance, many travel insurance companies have reportedly blacklisted airlines who have publicly expressed financial troubles. With the list getting longer and longer it is important to check if the airline you are traveling with will be covered by your travel insurance company.
Before going any further, the latest list of travel suppliers that may not covered for “financial default” can be found at: http://www.totaltravelinsurance.com/bankruptcy-insurance.asp .
Several things to consider when shopping for travel insurance are:
1) Does your plan include default of travel supplier coverage?
Make sure you are covered for bankruptcy in the first place. Look for policies that include coverage for “financial default of travel provider.” This coverage is provided usually in the event of a complete suspension of operations due to financial circumstances whether or not bankruptcy is filed. Employee strikes may also be covered under this provision.
2) Did you buy travel insurance within the eligibility window?
Most plans require you to purchase insurance within 15 days of your trip deposit. (Others may require 10 or 21 days so don’t wait too long or you will not be covered.) It is also common to have to wait for 14 days after purchasing to be able to file a claim for reimbursement. The reason for this is insurance companies want to make sure you bought insurance for precautionary reasons and not on-the-fly as soon as the 5 o’clock news announced your airline has completely shut down its operation. Keep in mind that insurance is a high target for fraud. Generally insurance companies have customer’s interests in mind. If you go with a company that is reputable you should receive concise answers to your questions from knowledgeable and friendly staff.
3) Lastly and most importantly you want to make sure that your travel supplier (airline in this case, but can include cruise or tour company) is on the list of covered companies with your travel insurance of choice. A good travel insurance company will inform their customers of what companies they have blacklisted.
Alexander Velinov, president of Total Travel Insurance, said, “I always knew that it would be difficult to get coverage for small airlines. I never anticipated that large airlines such as United and U.S. Airways would be on the ‘not-covered for financial default’ list of most insurance companies. That is why we decided to add this important feature to our Web site. We want the consumer to have all of the information before buying, instead of getting bad news when filing a claim.”
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