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Compare Travel Insurance Travel Insurance Tips ›  Insolvency Travel Insurance

Does travel insurance cover insolvency?

21 January 2020 By Crystal Moran

Do any travel insurance brands cover insolvency? While most standard travel cover policies do not provide protection for insolvency, collapse or default of airlines, travel agents, wholesalers, cruise operators, tour operators, hotels, car hire companies, railways or theme parks - we've found a few that offer some limited level of cover.

What is Insolvency? | Which Insurers Cover Insolvency? | Tips for Getting Help | Insolvency FAQs

What is insolvency?

An insolvent company is one that is unable to pay its debts when they are due. The three most common insolvency procedures are voluntary administration, liquidation and receivership. If your airline, travel agent, or other travel provider becomes insolvent, they can no longer trade - leaving travellers in the lurch!

Most comprehensive travel insurance policies do not cover the insolvency of any travel agent or provider, while a few offer cover for collapsed travel providers, like airlines, but not the collapse of travel agents. 
insolvency travel insurance

Which insurers cover insolvency?

**Click on the plus icon to see more detail**

Insurer Underwriter Conditions
AIG Australia Limited maybe Provides reimbursement of reasonable costs to assist you should there be a Financial Default of Your travel services provider.

This does not include the Financial Default of any travel agent, tour wholesaler, tour operator or booking agent. Refer to the PDS for full details.
Certain underwriters at Lloyd's maybe Cover for the cost of travel, accommodation, car hire and excursions paid or contracted to be paid by You to organisations unrelated to the failed Travel Service Provider in respect of the Trip; or the Reasonable cost of alternative arrangements for You to reach Your destination. In the event Your Trip is curtailed, You are covered for the Reasonable cost of alternative arrangements for You to reach Your pre-booked destination or return to Your Normal Country of Residence. 

Exclusions: 1. Financial Default of any travel agent, tour wholesaler, tour operator or booking agent. 2. Financial Default of a Travel Service Provider if at the time of booking Your Trip and/or purchasing Your policy, the Financial Default had already occurred or a reasonable person would expect to occur. 3. Any claim excluded by the General Exclusions applicable to this policy. Read page 17 of the PDS.
Chase Underwriting maybe Travel carrier cover only Up to $5000 on Excel Plus policy only.
Not Travel agents, Tour operators or Booking agents. Read page 9 of the PDS.
Chase Underwriting maybe Cover for insolvency of a Travel Carrier which typically refers to claims relating to airfares.

You are not covered for the insolvency of any travel agent, tour wholesaler, tour operator or booking agent. Read page 9 of the PDS.


General Advice Warning: The contents of this article were accurate at the time of writing. Insurers change their policies from time to time, so some information may have changed. You should always read the Product Disclosure Statement of your chosen insurer to understand what is covered and what isn't. The information provided is of a general nature only and does not take into account any personal objectives, financial situation or needs. Before making a decision you should consider the appropriateness of the information having regard to your personal circumstances.

Getting help for Travel insolvency

1. Use reputable companies

If you’re a do-it-book-it yourself kind of traveller who buys your flights direct with an airline you've never heard of, then you may be the most vulnerable when it comes to protection. If you use a travel agent to book your holiday and the airline goes bust, you might be able to get a refund through the agent, or they may be able to help get you home if you’re stranded overseas.

2. Pay with your credit card

Even if you do tend to book your travel arrangements yourself, a good way to ensure protection is to pay using a credit card. The credit card company might be able to recover your money if you request a chargeback, or you might be able to claim under your credit card insurance. Reconsider buying your travel arrangements using a debit card as they don’t provide the same level of protection.

3. Seek compensation through government programs

In some states and territories, there are programs in place where you may be able to apply for compensation for insolvent companies. Contact the Australian Competition and Consumer Commission for more information.

4. Take a big look at the small print

Our table above can help you find travel insurers who may offer insolvency cover, but this doesn’t mean you can get away without reading their policy. We know it’s not a great read, but it’s really important to understand the cover you’re purchasing. If you’re not sure that you understand the conditions you can always call the insurer for advice before buying.

5. Compare to find the best cover for you

Shop around for insurance to make sure you are getting the right cover for your travel needs. You can use our quote engine to compare the travel insurance of over 20 Aussie insurers in seconds.

insolvency travel business help

Insolvency Travel Insurance FAQs

Does travel insurance cover the insolvency or bankruptcy of a travel provider or agent?

While there are no travel insurers we know of that cover for the insolvency of a travel agent, some travel insurers cover insolvency of transport providers, like airlines or cruise companies. Compare insolvency travel insurance via our table above.

What is a credit card chargeback?

Due to consumer protections associated with credit cards, if your travel provider or agent goes insolvent and fails to deliver services or goods, you can request a chargeback from your bank. They will review your case, and if they find you haven't gotten what you paid for, they may reverse the transaction. There are often time limits on when you can request them, so give your bank a call to learn more.

What should I do if my travel agent or provider becomes insolvent?

You've still got some options. If you've booked with a travel agent, they may be able to refund you if your airline or accommodation provider becomes insolvent. Additionally, you may be able to get a chargeback through your bank, or get compensation through a government program. Depending on which travel insurer you're with, you may also have cancellation benefits for the insolvency of a transport provider.

Why don't all travel insurers cover insolvency?

Insurance is a risk-based product, and the financial risk an insurer would be exposed to if a major travel agent became insolvent could be enormous. By limiting their exposure to such risks, they don't have to include insolvency risks in their premium calculations.

Contributor Crystal Moran

Crystal Moran

With a research and journalism background, and certified in Tier 2 General Insurance General Advice, Crystal is passionate about investigating customers’ tricky travel questions and helping them find the answers they’re looking for. A writer and filmmaker whose favourite trips have been to film festivals in Cuba and South Korea, and campervanning around the USA, she loves getting to know new people and seeing a glimpse of the world through their eyes.

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