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Two-fifths of travel policies offer no protection for airline failure

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Two in five travel insurance policies offer no protection if an airline collapses leaving holidaymakers exposed, analysis shows.

Less than half (48%) of travel insurance policies offer cover for airline failure as standard, meaning that travellers could be left unprotected if the airline they’ve booked with gets into financial difficulty and they can’t travel, according to independent financial information business Defaqto.

These figures come days after Icelandic budget carrier Wow Air announced it had stopped operating and cancelled all flights, leaving passengers stranded, and a month after the collapse of Flybmi.

Defaqto’s research found cover for airline failure is offered as an optional extra in 6% of annual and 7% of single trip policies, but 46% offer no protection at all.

Brian Brown, head of insight at Defaqto, said: “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. Airline failure is not covered as standard on over two fifths of travel insurance policies as the risk is usually relatively small.”

Wow Air passengers who booked their flights as part of a package holiday will be fully protected through the ATOL scheme and the travel firm is responsible for making alternative flight arrangements or providing a full refund.

However, those who have booked flights directly and haven’t travelled yet, are at risk.

Brown said: “If you paid for your flight with a credit card, you will be able to get a refund from the credit card company and should contact them directly for this. If you bought your flight with a debit card, you may be able to claim under your travel insurance policy if you have this cover.”

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