An independent financial information company has warned that 46% of travel insurance policies do not include protection against airline failure, which means many Wow Air passengers will not be covered for cancelled flights as a result of the airline’s closure on Thursday.
Defaqto, which rates products including travel policies, has said that travellers are often left unprotected by policies that don’t cover against airlines getting into financial difficulty. Only 48% of annual and 47% of single-trip policies include this as standard, often describing it as “scheduled airline failure” cover. A small number of insurers also offer this as an optional extra (in 6% of annual and 7% of single-trip policies). Fine print may also include cover for “travel disruption”, when a passenger can’t reclaim the costs from another source.
“With flights and holidays cancelled as a result of the Wow Air collapse, a lot of people’s holidays will be ruined over the coming months,” said Brian Brown, head of insight at Defaqto. “Airline failure is not covered as standard on over two-fifths of travel policies as the risk is usually relatively small.”
Defacto analyses the 1,103 single-trip and 1,125 annual policies available in the UK, and its website also includes ratings for cruise, gap-year and winter sports insurance.
The research highlights the importance of understanding what situations travellers are protected from and the get-out clauses that allow insurers not to pay out.
“This is the second budget airline to collapse this year, so scheduled airline failure is a useful feature to have,” said Brown. “Another thing to be aware of is that if the airline collapses while you’re abroad, you may not get the payment for the return immediately, so always make sure you have access to some emergency funds in case the worst happens. You should always read the policy. It is the most boring half hour of your holiday, but probably the most important.”
Passengers not covered by their travel insurance who booked Wow Air flights as part of a package holiday will be covered by Atol, and should be offered alternative flights. Those who booked directly using a credit card are advised to contact providers to seek a refund. Passengers may also have similar cover if they paid by Visa debit card and should contact their bank. Today’s closure is said to have affected thousands of passengers, many of whom are likely to face a financial loss from the situation.
