The collapse of Monarch Airlines last autumn exposed a gaping hole in many travel insurance policies.
To avoid complete mayhem, the Government and Civil Aviation Authority (CAA) decided in this instance to repatriate all Monarch travellers stranded overseas.
However, for the 300,000 passengers who had yet to travel, only those who had booked a package had automatic financial protection under the ATOL system – the CAA’s own protection scheme.
The collapse of Monarch Airlines last autumn exposed a gaping hole in many travel insurance policies (file picture)
The many thousands of independent travellers holding flight-only tickets didn’t have this belt-and-braces cover. Instead, they had to rely on the protection that comes from booking with a credit or debit card – or see if they could claim on their travel insurance.
Monarch will certainly not be the last airline to fold. In December, Niki, Austria’s second-biggest carrier, bit the dust, and with the impending complications of Brexit, this year may well be a very turbulent time for European airlines.
So before buying travel insurance, it’s worth checking carefully to see if the policy extends to airlines going bust. Fewer than half of the policies on the market provide this cover as standard.
Look in the small print for something called Scheduled Airline Failure Insurance (SAFI).
AND HAVE YOU CHECKED FOR THESE?
Other thorny areas where you’ll need the right level of cover for your particular needs include:
- Pre-existing medical conditions.
- Natural disasters such as hurricanes and earthquakes.
- Hazardous activities – some insurers exclude common ones, such as hiking above 8,200ft.
- Expensive items – you can often purchase extra ‘gadget cover’.
- Cruise cover – do you want coverage for cabin confinement due to illness or missed ports?
This will allow you to be refunded, up to a specified amount, for unused flights, and also for the cost of a replacement flight home if the airline folds while you are away – which, despite the Government’s generosity with Monarch, you are not entitled to and should not expect unless you’re on an ATOL- protected package.
Some policies provide End Supplier Failure. This is better than SAFI, because it not only covers airline failure, but also insures you against the hotel, villa company, car hire, ferry or train operator you’re booked with going bust.
End Supplier Failure or SAFI are often omitted in cheaper policies. For example, over-50s specialist Staysure (staysure.co.uk) includes End Supplier Failure in its comprehensive policy (up to £3,000), but not in its basic policy.
Sometimes you can add on the cover for an extra fee, and you can also purchase stand-alone End Supplier Failure insurance from ProtectMyHoliday.com for a small fee.
There’s another related issue to consider. If you’re travelling independently and the airline goes bust or cuts flights (remember the mass cancellations Ryanair made last year?), you’ve also got the headache of dealing with any separately made travel arrangements, such as hotels and car hire. Some of these bookings may well be on a non-refundable basis.
Most travel insurers won’t cover these so-called ‘consequential losses’, and neither will the protection you get through credit/debit card bookings.
So before buying travel insurance, it’s worth checking carefully to see if the policy extends to airlines going bust (file picture)
However, there are a few insurance policies that do provide such cover, for example with LV (lv.com) and PJ Hayman (pjhayman.com). Again, scour the small print of any policy, and look specifically under ‘travel disruption’ or ‘travel abandonment’ sections to see what’s offered.
You may be able to add on the cover for an additional fee. For example, Staysure’s Optional Travel Disruption Extension, which includes cover up to £1,000 for unused accommodation, costs £22 extra on a worldwide annual policy.
All the above touches on a very important general point. With price-comparison websites, it’s all too easy to select a travel insurance policy on price alone. Don’t: it can be a false saving. Instead, check thoroughly whether the policy you’re considering provides suitable or substantial enough cover.