Travel insurance with insolvency cover

Finally, some good news! Domestic travel is picking up, so some insurers have started offering cover again 🦘 Just remember, you won't be covered for any pandemic related claims if you do take out domestic travel insurance.

If your travel insurance policy covers travel services provider insolvency or financial default, you can be covered if your trip is cancelled, shortened or rescheduled due to your travel provider going bankrupt. Not many travel insurers cover insolvency, but here is a handful that does.

Get travel insurance for insolvency

The following is a list of travel insurers who offer cover for travel provider insolvency:

Brand	Cover limit	You can get covered for	Apply
	$10,000	Unrecoverable and unused travel arrangements Your reasonable costs of rescheduling your trip Your reasonable costs of additional travel arrangements if you have to return home early The value of your frequent flyer points, air miles or vouchers used to pay for your trip
	$5,000	Unrecoverable and unused travel arrangements Your reasonable costs of rescheduling your trip
	$1,000	Unrecoverable and unused travel arrangements Your reasonable costs of rescheduling your trip Your reasonable costs of additional travel arrangements if you have to return home early
	$1,000	Unrecoverable and unused travel arrangements Your reasonable costs of rescheduling your trip Your reasonable costs of additional travel arrangements if you have to return home early	Get quote

How can people protect themselves against bankruptcy?

If a provider such as a tour operator or airline becomes insolvent, there are several ways you may be able to recover your money.

• The travel agent may be able to get a refund for you, or at least help you get home if you’re stranded mid-holiday
• If you paid for your holiday on your credit card, you may be able to request a chargeback from your credit card provider and have the money returned to your credit card
• If your travel insurance policy includes insolvency of a travel provider, you will be covered up to a certain benefit amount

However, there are no travel insurance policies that provide cover if your travel agent becomes insolvent. The only way to recover your money is by requesting a chargeback from your credit card company or being compensated through your travel agent’s insolvency cover.

Is travel agency insolvency covered?

Currently, Australian travel insurers do not cover travel agency insolvency. But for most of the time, that should be okay since travel agencies don't usually operate the flights or hotels anyway.

Tips to protect yourself

Minimise your risk before booking your holiday by:

• Paying for it with your credit card
• Checking with your travel agent to see if they have their own insolvency protection cover
• Reading your travel insurance policy carefully to understand what you are covered for in such situations

If you are unable to recover your money any other way, some Australian states and territories have programs in place where you can claim compensation for losses to insolvent companies. You can find out more by contacting the ACCC.

Credit card chargebacks: What are they, how do they work and how long do I have?

Currently in Australia, a credit card chargeback is one of two ways you can get your money back if your travel agent goes broke. This is only because there are consumer protection rules associated with the use of Visa, MasterCard and American Express credit cards.

When you apply for a credit card for a chargeback, your provider will examine the evidence and if they find cause will reverse the transaction, which returns the money paid to your credit card.

As long as you purchased your holiday on your credit or debit card and selected "credit" when you paid, you have a good chance of being compensated for travel agent insolvency.

Common reasons for chargebacks include:

• Unauthorised transactions. Someone uses your credit card details without your permission.
• Duplicate processing. You are charged more than once for a purchase.
• Direct debits. A direct debit continues after you have cancelled it.
• Merchandise not received. You do not receive the merchandise or service you paid for (this would include travel agent insolvency).

While chargebacks can be a lifesaver, it’s important to remember there are time limits. These limits vary but generally you have between 30 and 120 days from payment to apply for a chargeback.

Don’t get caught out

With only a handful of Australian insurers covering travel provider insolvency and none covering travel agent insolvency, sometimes a traveller’s only recourse is to either use their credit card to pay for their holiday or find a travel agent with insolvency protection.

Before taking out a travel insurance policy, make sure you’ve checked if it covers provider insolvency at the very least.

How do insurers treat insolvency?

^{_{Picture: Simon Cunningham, licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)}}

Picture: Shutterstock