Travel insurance won't cover failure of tour operator, Brits warned
Many holidaymakers may be banking on the security of their travel insurance more than ever, which could be an unwise decision.
With several of the UK's major tour operators and airlines collapsing under the strain of the credit crunch many holidaymakers may be banking on the security of their travel insurance more than ever.
Unfortunately, one expert has advised holidaymakers that most travel insurance policies will not cover them for the failure of a tour operator or air carrier, potentially leaving them in the lurch financially.
Recently, the low-cost transatlantic carrier Zoom went bust leaving hundreds of passengers stranded at airports around the UK. Zoom was forced to ground all planes after creditors attempted to seize its assets. It was the 24th carrier in 2008 to close operations after the price of oil skyrocketed.
However, while not all travel insurance policies cover holders for such an event, the ABI advised that some protection is normally offered if a holidaymaker has booked through using their credit card. Travellers were warned that this can be a long-winded process, which can take months to complete and may not cover those people stuck abroad unable to get back to the UK.
Malcolm Tarling, a spokesperson for the ABI, explained: "Most, but not all, standard package travel policies [both annual and single trip] do not cover failure of tour operator or air carrier.
"Typically, cancellation is covered when specified events occur, such as illness of yourself or a close relative, jury service or being made redundant."
He concluded that the best way holidaymakers can cover themselves is to book by credit card with an Atol-bonded provider. This, he said, will mean that if the worst comes to worst, holidaymakers will be awarded compensation for their loss.
Another form of support for travellers who fall victim to small carriers' financial woes has come from the big players in the aviation industry. Both Virgin Atlantic and British Airways offered those who were due to fly with Zoom the chance to take advantage of discounted fares on their own flights.
The carriers also offered this olive branch to customers of Silverjet, the business class-only carrier that flew to New York and Dubai, which was one of the first carriers to go under.
Furthermore, the Times newspaper reports that aviation regulators are now considering imposing a levy on all air passengers' flights in a bid to create an emergency fund that will help compensate those who suffer as a result of the casualties of the credit crunch.
