Nothing spoils a holiday more than being stranded following the financial collapse of a travel operator. Until recently, a traveller’s problems with a travel agent or transport operator going belly-up had some protection offered by the Travel Compensation Fund. This government legislated fund compensated travellers if the operator or agent collapsed and failed to account for money paid by you the traveller.
However, this particular safety net is no more. From 30 June 2014 the Travel Compensation Fund is closed. The fund has been replaced with a series of insurance options for the prospective traveller; one of these is ‘end provider insurance’.
Choosing the right cover is important. A possible complication is that some insurance provider organisations may suggest that two insurance covers are now required – one to cover the usual travel risks and a second to cover insolvency of the travel agent or transport operator.
Not all insurers cover insolvency; in fact some of Australia’s best known travel insurer agencies do not offer this cover so a wise traveller will select a Comprehensive Travel policy that covers both risks.
Check also that your travel policy wording includes insolvency with a limit of at least $10,000 cover for a single traveller or $20,000 cover for a family for the costs that can be incurred in rebooking or cancelling your journey.
Another tip before selecting your transport operator is to check if their name appears on the Travel Insurer’s website which lists airlines that have a history of financial stress. If you purchase an airfare with one of these stressed airlines you are not covered in the event of the airline entering receivership. These lists are regularly updated to reflect the financial status of an airline, either adding or removing airline companies as situations change.
An example was Air Australia / Strategic Airlines which became insolvent in February 2012 when the airline halted all flights and went into administration.
Your insurance broker is best placed to make sure you have the right travel insurance policy and your best chance of having that happy holiday.