As the COVID-19 pandemic continues, the impact continues to spread, and has evolved from travel closures and health concerns to a widespread economic crisis. With no clear end in sight, the financial impacts have already forced major companies out of business, and others are struggling to stay afloat. The ongoing nature of this crisis can lead to a number of financial concerns for travelers, from the longevity of their travel supplier to their own employment status.
At Squaremouth, we know travelers spend a significant amount of time and effort planning their trips, and we understand many of these travelers want to be sure their financial investments are protected. Amid these difficult economic times, many travelers may be feeling even more financial pressure.
For those still planning trips, the financial troubles many travel suppliers are facing creates a new and unfamiliar layer of challenges for travelers. The Financial Default benefit of travel insurance may provide the coverage these travelers need.
What is the Financial Default of travel insurance?
Many travel insurance policies include the Financial Default benefit as part of their Trip Cancellation and Trip Interruption coverage. Financial Default is designed to reimburse a traveler’s prepaid and non-refundable trip costs if they need to cancel because of a complete suspension of operations by their travel supplier due to financial circumstances. This coverage can be triggered whether the travel supplier files bankruptcy or not.
What are the eligibility requirements for Financial Default?
As a cancellation benefit, the amount of Financial Default coverage a policy includes is directly based on a traveler’s insured trip cost. Therefore, in order for this benefit to reimburse a traveler, they must insure their trip cost.
Financial Default is one of the few time-sensitive benefits of travel insurance, meaning it will only be available for 10-21 days after a traveler makes their first trip payment, such as buying their airline tickets, booking their hotel, or making a down payment for a cruise, among others. The length of time varies by policy and provider.
Additionally, there may be a 10 to 21-day wait period after the policy is purchased before this benefit goes into effect. This means if a traveler buys a policy and their travel supplier declares insolvency a few days later, coverage will not be available.
Financial Default coverage amid COVID-19
Many major travel suppliers have publicly announced that the COVID-19 impact has either put them out of business, or that it likely will if the situation continues, including Virgin Australia, Virgin Atlantic, Norwegian Cruise Line, and Hertz, among others.
In response, more travelers are turning to Financial Default coverage to insure their trip costs. Since the European travel bans began on March 13, the percentage of travelers buying policies specifically for Financial Default coverage has more than doubled over the same period last year.
If you are planning a future trip and would like to be covered in the event your travel supplier declares insolvency, click here to search for a travel insurance policy with Financial Default coverage.