In 2018, Erik approached a travel agent to arrange flights for his family to travel to Sweden. The travel agent sent Erik a number of options. Erik eventually chose flights which included travel insurance, if the flights were paid for with a credit card.
Three weeks before the trip, Erik contacted the travel agent to enquire about the luggage allowance. During the call, the travel agent informed Erik that the flights had been cancelled, due to financial problems with their supplier. The travel agent said that it would refund Erik the cost of the trip.
Soon after, the travel agent went into liquidation, and did not refund the cost of the trip. Erik made a claim to his insurer for the loss.
The insurer declined Erik’s claim. The policy wording excluded cover for a loss caused by the failure of a booking agent, to provide services, by reason of their own financial default.
The insurer understood that the travel agent had defaulted and was not honouring its agreement to refund Erik. This circumstance was excluded under the policy.
We reviewed the claim and recommended that Erik discontinue his complaint. We found that the policy wording clearly excluded Eric’s circumstances.
Erik acknowledged our finding and discontinued his complaint.
We did suggest that Erik pursue the refund through the travel agent’s liquidator.
Insights for consumers
Travel insurance policies will not usually cover loss caused by the financial collapse of a ravel agent or supplier. It is therefore important that consumers research the companies that they book their travel with, and evaluate whether it is a reputable company. It is usually possible to look at reviews of companies online, which may help when making decisions on who to use.