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You can find the current article at its original source at https://www.theguardian.com/money/2017/oct/07/travel-insurance-airline-bust-monarch-policy
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| Does your travel insurance cover an airline going bust? | Does your travel insurance cover an airline going bust? |
| (4 months later) | |
| Miles Brignall | |
| Sat 7 Oct 2017 07.00 BST | |
| Last modified on Mon 27 Nov 2017 15.49 GMT | |
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| If you have an annual travel insurance policy you may want to dig out the paperwork and find out whether you have “scheduled airline failure” cover, because given the state of the industry at the moment, you will almost certainly want a policy that includes it. | If you have an annual travel insurance policy you may want to dig out the paperwork and find out whether you have “scheduled airline failure” cover, because given the state of the industry at the moment, you will almost certainly want a policy that includes it. |
| In the wake of last weekend’s Monarch collapse, Guardian Money has been examining the terms and conditions of some of the UK’s most popular travel insurance policies. | In the wake of last weekend’s Monarch collapse, Guardian Money has been examining the terms and conditions of some of the UK’s most popular travel insurance policies. |
| The headline findings? A surprisingly large group of insurers, including some big-name banks, will decline to step in and pay up if your chosen airline collapses either before you are due to travel or while you are away. | The headline findings? A surprisingly large group of insurers, including some big-name banks, will decline to step in and pay up if your chosen airline collapses either before you are due to travel or while you are away. |
| Travel policies offered via paid-for bank accounts with NatWest/RBS don’t offer scheduled airline failure cover, and neither does HSBC for its Premier account customers, though it said it would “consider” claims following an airline collapse. Another of the UK’s biggest insurers, Axa, does not provide this cover on either its own annual or single-trip policies. | Travel policies offered via paid-for bank accounts with NatWest/RBS don’t offer scheduled airline failure cover, and neither does HSBC for its Premier account customers, though it said it would “consider” claims following an airline collapse. Another of the UK’s biggest insurers, Axa, does not provide this cover on either its own annual or single-trip policies. |
| Lloyds Bank’s popular annual travel policies do not feature the cover, but Axa, which underwrites Lloyds’ policies, has said the bank’s “travel disruption” cover would pay up to £5,000 per person in the event that the insured individual can’t reclaim the extra costs from another source. | Lloyds Bank’s popular annual travel policies do not feature the cover, but Axa, which underwrites Lloyds’ policies, has said the bank’s “travel disruption” cover would pay up to £5,000 per person in the event that the insured individual can’t reclaim the extra costs from another source. |
| Nationwide, another big travel insurer via its Flex and FlexPlus accounts, does provide scheduled airline failure insurance. Overall, about half of UK travel policies offer it, according to the analysts Defaqto. | Nationwide, another big travel insurer via its Flex and FlexPlus accounts, does provide scheduled airline failure insurance. Overall, about half of UK travel policies offer it, according to the analysts Defaqto. |
| Until relatively recently, scheduled airline failure cover was rare. Most people relied on the Air Travel Organiser’s Licence (Atol) scheme, which protects package holiday bookings, or the protection offered by credit cards. | Until relatively recently, scheduled airline failure cover was rare. Most people relied on the Air Travel Organiser’s Licence (Atol) scheme, which protects package holiday bookings, or the protection offered by credit cards. |
| But the rise of the low-cost carriers and the fact that consumers are now more likely to put together their own holiday packages means you will want an insurance policy that specifically includes this cover. That is particularly the case if you are booking expensive peak-time flights that would cost a lot to replace at the last minute. | But the rise of the low-cost carriers and the fact that consumers are now more likely to put together their own holiday packages means you will want an insurance policy that specifically includes this cover. That is particularly the case if you are booking expensive peak-time flights that would cost a lot to replace at the last minute. |
| While the Civil Aviation Authority has stepped in to help passengers caught up in the Monarch collapse, most passengers are left scrabbling for replacements when a carrier ceases trading. According to ProtectMyHoliday.com, there have been 254 global airline failures in the last decade. When XL Airways collapsed in 2008, it left 200,000 passengers holding worthless bookings. Those who had not paid using a credit card were left relying on travel insurers, who in most cases refused to pay out. | While the Civil Aviation Authority has stepped in to help passengers caught up in the Monarch collapse, most passengers are left scrabbling for replacements when a carrier ceases trading. According to ProtectMyHoliday.com, there have been 254 global airline failures in the last decade. When XL Airways collapsed in 2008, it left 200,000 passengers holding worthless bookings. Those who had not paid using a credit card were left relying on travel insurers, who in most cases refused to pay out. |
| Today, insurers offering scheduled airline failure cover typically state that they would only step in where the other protections – Atol or credit card – have declined to pay out. | Today, insurers offering scheduled airline failure cover typically state that they would only step in where the other protections – Atol or credit card – have declined to pay out. |
| It can be hard for consumers to know whether they have cover or not. In many cases Money had to phone the supplier as the T&Cs were so poorly worded as to be ambiguous. | It can be hard for consumers to know whether they have cover or not. In many cases Money had to phone the supplier as the T&Cs were so poorly worded as to be ambiguous. |
| Defaqto, which gives all insurance products a star rating, said this week that 49% of annual travel policies include the cover, but it declined to name which big ones don’t. Consumers can’t buy a Defaqto five-star policy and assume it offers airline failure cover because many of its five-star polices do not. | Defaqto, which gives all insurance products a star rating, said this week that 49% of annual travel policies include the cover, but it declined to name which big ones don’t. Consumers can’t buy a Defaqto five-star policy and assume it offers airline failure cover because many of its five-star polices do not. |
| Money has found that in general only the priciest policies include it – and the amount of cover varies enormously. Tesco offers three levels of cover on its travel policies – Value, Standard and Finest – and only the latter policy provides scheduled airline failure cover. Admiral’s Premier policies offer it (up to £3,000) while its Standard and Backpacker policies don’t. Direct Line and Saga both offer the cover. Only LV=’s Premier policies have it. | Money has found that in general only the priciest policies include it – and the amount of cover varies enormously. Tesco offers three levels of cover on its travel policies – Value, Standard and Finest – and only the latter policy provides scheduled airline failure cover. Admiral’s Premier policies offer it (up to £3,000) while its Standard and Backpacker policies don’t. Direct Line and Saga both offer the cover. Only LV=’s Premier policies have it. |
| John Lewis only provides the cover on its more expensive policies, and only up to £1,500, which may not be enough to replace many long-haul flights. InsureandGo does offer the cover as standard – and up to £5,000. | John Lewis only provides the cover on its more expensive policies, and only up to £1,500, which may not be enough to replace many long-haul flights. InsureandGo does offer the cover as standard – and up to £5,000. |
| Georgie Frost, head of consumer affairs at Gocompare, says last week’s events have pushed the matter centre stage. “It is rare for such a large airline as Monarch to fail, but smaller airlines have gone bust in the past, leaving passengers stranded. | Georgie Frost, head of consumer affairs at Gocompare, says last week’s events have pushed the matter centre stage. “It is rare for such a large airline as Monarch to fail, but smaller airlines have gone bust in the past, leaving passengers stranded. |
| “If you take out scheduled airline failure insurance, you’ll receive up to a specified amount per person for any irrecoverable flight costs if the airline goes bust before your trip, or while you’re already away. | “If you take out scheduled airline failure insurance, you’ll receive up to a specified amount per person for any irrecoverable flight costs if the airline goes bust before your trip, or while you’re already away. |
| “The Monarch failure is also a reminder of the need to protect your holiday with insurance as soon as you book it. The majority of people buy travel insurance the week before they fly, which means they miss out on valuable benefits like cancellation cover,” she says. | “The Monarch failure is also a reminder of the need to protect your holiday with insurance as soon as you book it. The majority of people buy travel insurance the week before they fly, which means they miss out on valuable benefits like cancellation cover,” she says. |
| Always fly by credit card | Always fly by credit card |
| The Monarch collapse is a reminder that consumers should always use a credit card when buying flights, as it in effect insures the individual against the airline’s collapse. | The Monarch collapse is a reminder that consumers should always use a credit card when buying flights, as it in effect insures the individual against the airline’s collapse. |
| When you buy something costing more than £100 and pay by credit card, you can hold the card provider jointly liable to provide the service. If the supplier or airline isn’t around to provide the item or flight, the bank is responsible and will step in. | When you buy something costing more than £100 and pay by credit card, you can hold the card provider jointly liable to provide the service. If the supplier or airline isn’t around to provide the item or flight, the bank is responsible and will step in. |
| The protection was enshrined in section 75 of the Consumer Credit Act 1974, but there are crucial caveats. To get the protection you have to have booked the flight and paid the airline directly – not via an agent or a booking website – using your credit card. | The protection was enshrined in section 75 of the Consumer Credit Act 1974, but there are crucial caveats. To get the protection you have to have booked the flight and paid the airline directly – not via an agent or a booking website – using your credit card. |
| Guardian Money is regularly contacted by people who still use debit cards to book flights and holidays. Just don’t. Some Monarch customers found that the Atol protection did not apply to them. Many will be able to apply to their credit card provider for a full refund. Debit card payers instead have to file a “chargeback” claim. These can succeed, but there are no guarantees. | Guardian Money is regularly contacted by people who still use debit cards to book flights and holidays. Just don’t. Some Monarch customers found that the Atol protection did not apply to them. Many will be able to apply to their credit card provider for a full refund. Debit card payers instead have to file a “chargeback” claim. These can succeed, but there are no guarantees. |
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