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Squaremouth Explains Possible Loopholes of Travel Insurance “Financial Default” Benefit

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ST. PETERSBURG, FL – October 25, 2012 – The recent, unanticipated closure of Club ABC, a private, members-only travel club, has left many unhappy travelers with significant losses and no recourse. Many of the affected travelers purchased insurance through Club ABC, which has proven worthless in the wake of the club’s financial default. According to travel insurance comparison site, Squaremouth, this is a sobering example of the possible pitfall of purchasing insurance through a travel provider.

With a compromised economy, an increasing number of third-party travel insurance providers have included financial default coverage in trip cancellation and interruption benefits. A policy with financial default coverage may ensure that a traveler’s prepaid, non-refundable costs are protected in the event that any supplier – from an airline to a safari company – experiences financially provoked closure or service interruptions. While this benefit might allow travelers to claim losses if a travel supplier becomes insolvent, there are two major stipulations to be aware of.

First, if a policy is purchased through a travel supplier that later becomes bankrupt, it is unlikely a financial default claim would be honored. Unfortunately, this is a possible scam situation. If a travel supplier booked travel and purchased an insurance policy for a customer, and then claimed bankruptcy, the scenario could be interpreted as fraud.

“That is the contingency of purchasing travel insurance through a travel supplier,” says Chris Harvey, CEO of Squaremouth. “This doesn’t mean that travelers shouldn’t do it, but it does mean that they should first feel confident in the financial stability of the company.” If a traveler has any doubt, it is a good idea that they purchase an insurance policy themselves in order to maximize financial default benefits.

Second, the insurance policy and travel reservations must both be purchased while financial default remains completely unforeseen. If there has been indication of any kind that a company is experiencing financial distress prior to the policy purchase, it is unlikely that any related claims would be paid. For example, it would be too late for a traveler to purchase financial default coverage for an airline after the possibility of the carrier’s bankruptcy was made public.

With the instability of today’s economic climate, financial default coverage could prevent costly losses to travelers, but it is important to understand any policy exclusions. provides easy comparison tools to help visitors locate policies with the coverage they need, including financial default benefits. For additional information, Squaremouth representatives are available Monday-Friday from 9am-9pm ET to assist.

About Squaremouth
Squaremouth is America’s fastest growing travel insurance comparison site, helping customers instantly quote, compare and buy policies from every major provider. Squaremouth has an extensive network of partner sites worldwide. The company is headquartered in St. Petersburg, FL, with offices in Fort Wayne, IN. For more information, visit

About our Zero Complaint Guarantee
The cornerstone of our commitment to customers is Squaremouth’s guarantee to remove any provider from our website if there is a customer complaint that cannot be resolved to our satisfaction. Squaremouth offers the broadest selection of insurance with an emphasis on quality and follow-up care in providers featured. We also factor in independent evaluation from the insurance industry watchdog AM Best.

Chris Harvey
Toll-free (800) 240-0369 x 6103
Direct (727) 490-5802

Jessica Bell
Direct (727) 498-2813

Jenna Gravino
Direct (727) 502-6849

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