What to know about Coverage for financial default
Travel insurance can be beneficial for travelers who intend to go on vacation in ensuring that no unforeseen scenarios (covered by the policy) can spoil their trip. The most common issues that can ruin a vacation are usually personal health or weather related, but there are a wide variety of benefits available, such as Coverage for Financial Default. This type of trip protection covers you in the event that your travel supplier terminates its business operations citing financial reasons.
Financial Default and Bankruptcy
It should first be understood that financial default is not the same as bankruptcy when it comes to travel insurance coverage. In financial default, the company offering travel services ceases to operate or provide the services due to financial incapability and with no plan or hope to fix the financial problem or to return to operation. It is worth noting that some financial default plans may not cover the financial default of the intermediate agency from whom you purchased your travel ticket, land or sea agreement. It only covers the financial default of the Tour Company, hotel, airline or cruise company with which you will be traveling, because that would directly affect your ability to utilize the air, land or sea arrangement.
Bankruptcy, on the other hand, is a coverage plan that is applicable in the event that the company with which you will be traveling proceeds into a process of resolving its financial challenges and it may not necessarily cease to operate their normal business operations. In most bankruptcy scenarios, the company will still provide the travel arrangements, but is working with creditors in the background to reorganize their corporate and financial concerns. However, some insurance plans cover both the financial default as well as bankruptcy.
The Financial Default coverage tends to have eligibility requirements that one should consider. You typically need to buy the plan within a set amount of days from your initial trip payment date for the Financial Default benefit to be activated. Even though this stipulated time varies from one provider to another or from one plan to another, it usually falls between 10 to 14 days. Without meeting this requirement, you can still have other standard coverage on the plan, but not the Coverage for Financial Default.
It is important to compare providers and plans before you buy. If considering a plan with Coverage for Financial Default, make sure to click on the benefit to launch a window with full coverage details, definitions and exclusions.