What Is Third Party Supplier Financial Default Coverage?
What most people don’t know or understand is that the Financial Default coverage is for the Third Party. If you book a cruise directly with the cruise line, you are not covered for Supplier Financial Default because there is no intermediary to be the Second Party. If you booked with a travel agent who, in turn, made your cruise’s travel arrangements, the travel agent is the Second Party and the cruise line is the Third Party.
This is a common definition: “Third Party Party Supplier Financial Default” is a complete suspension of operations due to financial circumstances whether or not a bankruptcy petition is filed. In other words, just the act of filing for bankruptcy or becoming bankrupt doesn’t necessarily qualify as a valid Financial Default claim. The Third Party (not who you booked directly with) travel supplier has to completely cease operations.
This defines what a Third Party Party is: Supplier Financial Default does not cover where you arrange / book your travel. For example, you use a travel agency and it goes out of business. Ideally, the travel agency used an escrow account to store its clients’ funds while the money’s in their possession. You are not covered for Financial Default for money the travel agency hadn’t paid to the travel suppliers.
This is a brief summary of the Financial Default coverage. Please refer to the applicable policy’s Certificate of Coverage or Evidence of Benefits for the complete policy wording. Here are the links to our detailed description pages: CSA Freestyle Luxe, TripAssure, IMG, Travel Guard, Travel Insured and TravelSafe.
Important: If the travel supplier is already in bankruptcy, you can’t be covered for Supplier Financial Default.
Follow These Rules To Cover Third Party Supplier Financial Default
If you want Supplier Financial Default coverage, you have to fulfill these 3 requirements:
- You have to insure at least your trip’s full prepaid, non-refundable cost (you can’t round it down). If you don’t know your final trip cost, estimate it high to be safe. You can always lower it prior to your departure date. If it drops you to a lower trip cost range, you can get a partial refund, and
- You must get your travel insurance in the first 14 or 21 days after your first trip payment date (Travel Guard = 14 days, IMG = 20 days, TravelSafe = 21 days, Travel Insured WTP and WTP Plus = 21 days or no later than 24 Hours after you make your final Trip payment (CSA Freestyle Luxe), and
- You have to cover your trip’s full length.
Any payment on your trip is considered the first payment. This includes the tax you pay when you redeem frequent flyer tickets, refundable deposits or even a trip planning consultation fee if that fee is later credited toward your trip costs.
PPS - Even though TripInsuranceStore.com is the world's most informative travel insurance website, you are still responsible to know the coverage terms, conditions, limitations, and exclusions of your plan. No comments or explanations confirm or deny coverage. You need to refer to each plan's policy wording.
PPPS - The Trip Cancellation coverage begins at 12:01 a.m. on the day after the date the policy is purchased. All other coverages begin when you leave home for your trip when your departure date is in the future.
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