When you plan your trip, you don’t plan on your travel supplier going bankrupt. You expect them to be able to fulfill the services you bought from them. However, it is unfortunate that some businesses do close up shop, leaving travelers stranded and possibly
without recourse. With a good travel insurance policy, though, travelers don’t have to lose out just because their supplier experiences financial difficulties.
Icelandic airlines Wow Air abruptly ceased operations on March 28, 2019. All flights were cancelled, leaving passengers stranded – some in their destinations and some at home, waiting to leave on their trips. Wow Air’s website advised travelers to “check
available flights with other airlines.” It goes on to suggest travelers contact their credit card companies, travel agents, and travel insurance providers to seek compensation. The airlines did not offer to refund travelers’ money, instead saying
that they may be entitled to compensation if they file a claim with the administrator/liquidator of the bankruptcy.1
In short, it would likely take a while for travelers to get their money back. In the meantime, most travelers just wanted to get home.
If you have not yet departed on your trip, you may be able to file a travel insurance claim under trip cancellation coverage.
If you are on your trip and need to get home, you’ll have the same type of coverage under the trip interruption benefit.
Under Arch RoamRight plans, benefits will be paid due to Bankruptcy or Default of an airline only if no alternate transportation is available. If alternate transportation is available, benefits will be limited to the change fee charged to allow the traveler
to transfer to another airline in order to get to their intended destination.
It is also important for you to buy your travel insurance early so that you have coverage for if your common carrier goes bankrupt and experiences a complete cessation of services. Under Arch RoamRight plans,
you must purchase your insurance within 21 days of your initial trip deposit, and the bankruptcy and cessation of service must occur more than 14 days from the date you purchase your plan.
If your airline ceases operations due to financial default, and other aspects of your trip are impacted, you may also have coverage under the Delayed Arrival benefit. For example, if a passenger was taking Wow Air to Iceland, and then boarding a ship
to cruise around Iceland, they likely would have missed their ship’s departure. In this case, they may be eligible to receive reimbursement for non-refundable, pre-paid costs associated with the cruise, as well as additional travel costs incurred
to get them to the next port-of-call to board the ship.
Travelers who are stranded in a destination, trying to get home, may have coverage for extra hotel nights and meals incurred until they can travel home on another airline.
Airline employees may have trip cancellation coverage under Cancel for Work Reasons. If you purchase your travel insurance within 21 days of your initial trip
deposit, Cancel for Work Reasons is automatically included in the RoamRight Elite and Pro Plus plans, or it can be purchased as an upgrade with the Preferred plan.
Cancel for Work Reasons coverage protects in the following scenarios:
Arch RoamRight defines bankruptcy or financial default as “the total cessation of operations due to financial insolvency, with or without the filing of a bankruptcy.”
Coverage may vary by policy, provider and your state of residence. Most Arch RoamRight travel insurance plans offer trip cancellation coverage due to bankruptcy or default
of services, provided that:
For a list of all travel insurance exclusions and limitations, please read your policy.
1(2019, March 28). End of Operation of WOW AIR. Retrieved April 04, 2019, from http://wowair-web-files.s3.amazonaws.com/Information to passengers 28032019.pdf
RoamRight's Marketing Communications Specialist, Victoria Zidwick, has worked in the travel insurance industry for more than five years. She has traveled extensively throughout the United States and has a handful of international travel experiences.Victoria's travel experiences have changed in recent years, as her family grows and she is learning the ins and outs of traveling with children. Connect with Victoria on LinkedIn or follow her onTwitter or Google Plus.
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