How can insurance help when a travel provider goes bust?

After the collapse of Reed Holidays, operating as Young at Heart Holidays, numerous Aussies were both stranded mid-holiday and left severely out of pocket.

The travel provider went into liquidation last week, with Cor Cordis appointed to help close the business.

Per News Corp, tours already underway were cancelled instantly, while thousands of dollars paid by customers expecting to travel later this year are currently unaccounted for.

These include packages that are worth around $10,000 per person.

AFTA also revoked its ATAS accreditation immediately last week when it heard about the insolvency.

So we spoke to Allianz Global Assistance to find out what insurance companies can do to help in these dire circumstances.

“The collapse of travel companies in Australia can be a real concern for travellers, as we’ve seen with the recent collapse of Reed Holidays,” John White, Head of Distribution, Allianz Worldwide Partners, told Travel Weekly.

“There are travel insurance products available in-market that can provide protection in the instance that a travel service provider or wholesaler becomes insolvent, which can be an important coverage benefit to consider when spending thousands of dollars on a trip booked through a travel provider or intermediary.

“Allianz Global Assistance recommends that people check their travel insurance policy to see if it provides appropriate insolvency coverage. Allianz Global Assistance is also one of the few travel insurance providers that does offer an insolvency protection benefit as part of policies sold under a number of brands.”

Regrettably, for many this is too late, with a number of tours already underway cut short, and money parted with to finalise tour departures.

With regards to this, White added, “The other avenue for anyone affected by insolvency like Reed Holidays is to investigate whether they may be entitled to a credit card chargeback through your bank.

“If you paid for your trip in advance using a credit card and your travel agent goes into insolvency, Allianz Global Assistance recommends asking your bank for a chargeback on your payment.

“Your bank may be able to reverse a disputed transaction back into your account in accordance with rules set by Visa, MasterCard or American Express. This means the money goes back onto your credit card. This facility is also available on some debit cards.”

Speaking to TW earlier this week, Natalie Ball, Director of Comparetravelinsurance.com.au, warned that travel insurance as a rule does not provide cover against insolvency or bankruptcy of a travel agent. However, tour operators such as Reed Holidays would not be subject to such an exclusion.

Her alternative suggestions included:

*Check with your travel agent. Certain travel agents may have inbuilt insolvency protection cover and could provide you with compensation.

*Talk to your credit card provider. If you have paid for your holiday on your credit card, you may be able to seek reimbursement of your funds through your credit card.

*Get in touch with your insurer. If your travel insurance policy includes insolvency of a travel provider, you may be covered and should contact them as soon as possible.

As a final resort Ball advised those unable to recover their funds to contact their state government.

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

Latest comments

John McDonald says:
August 30, 2017 at 1:17 pm
Atas does nothing. Not sure what it was ever meant to do.
Best way is to pay everything by credit card. Many wholesalers now accept credit cards(net or gross) with either no card fee or a very small one.
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