Check The Fine Print On Your Travel Insurance

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Are travellers covered in the event of the bankruptcy or financial default of a service provider?

Recently, the collapse of Low Cost Holidays Group in the UK left 27 000 customers stranded and 110 000 customers with forward bookings out of pocket. The demise of Gateway2Travel showed SA travel managers and agents that the ‘supplier insolvency’ insurance is not always as effective as the name of the policy would suggest.

Anriëth Symon, head of travel at Zurich South Africa, said that the insolvency cover included tour operator and package deals that would protect the traveller from losing money if a holiday or trip could no longer take place due to the tour operator/travel supplier declaring insolvency.

However, the fine print in Zurich’s policy exclusions stipulates that insurance will not pay for the insolvency of ‘any travel agent, tour organiser, booking agent or consolidator responsible for booking your travel accommodation’. Also, losses caused by fraud or negligent misrepresentation by the travel supplier are not covered.

Licenced Operators

Symon said Zurich defined a ‘travel supplier’ as a licenced operator in South Africa. Licensed operators include a scheduled airline departing from South Africa, including all connecting and onward flights forming part of the insured journey; a cruise line; a rail or coach operator; a car-rental company or a hotel.

Also Hollard Travel Insurance assesses claims on a case-by-case basis. Uriah Jansen, MD of Oojah Travel Protection, which administers Hollard Travel Insurance, said the supplier insolvency offered by Hollard also excluded insolvency of tour operators. “A tour operator is not the supplier, but rather acts as a middleman between the supplier and end user. This is deemed an uninsurable risk.”

However, Jansen said although the Supplier Insolvency Cover didn’t generally include tour operators, they would assess every claim on a case-by-case basis. In the event of Gateway’s demise, she said Hollard Travel Insurance did compensate clients for their losses, even though Gateway was an aggregator and therefore actually fell outside the scope of the cover.

What Does This Mean For You?

So, does this insurance still offer a worthwhile cover for your clients? “Yes,” said Uriah, adding that travellers would be covered for airline financial default or direct supplier default, such as accommodation establishments. According to Syman, travellers have become more aware of and concerned about the insolvency of airlines and travel suppliers. “We are receiving more and more requests for this specific cover due to the challenges presented by the current economic climate.”

Compiled by: Melissa Jane Cook. Source: Travel and Meetings.