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What Is Supplier Financial Default Coverage?

“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 travel supplier has to completely cease operations.

Important: Supplier Financial Default does not cover you if the travel agency goes out of business. Ideally, the travel agency uses 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.

You will find a brief summary of the Financial Default benefits below. 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, Global Alert, MH Ross, Travelex, 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 Supplier Financial Default
If you want Supplier Financial Default coverage, you have to fulfill these 3 requirements:

  1. 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
  2. You must get your travel insurance in the first 14, 15, 20, 21 or 30 days after your first trip payment date (Travel Guard = 14 days, Global Alert = 15 days, MH Ross = 15 days, TravelSafe = 21 days, Travel Insured WTP and WTP Plus = 20 days and Travelex Max = 30 days or no later than 24 Hours after you make your final Trip payment (CSA Freestyle Luxe), and
  3. 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.

CSA Freestyle Luxe’s Plan says:

“FINANCIAL INSOLVENCY means the total cessation or complete suspension of operations due to insolvency, with or without the filing of a bankruptcy petition, whether voluntary or involuntary, by a tour operator, cruise line, airline, rental car company, hotel, condominium, railroad, motor coach company, or other supplier of travel services which is duly licensed in the jurisdiction of operation other than the entity or the person, organization, agency or firm from whom you directly purchased or paid for your Trip, provided the Financial Insolvency occurs more than 14 days following your effective date for the Trip Cancellation Benefits. There is no coverage for the total cessation or complete suspension of operations for losses caused by fraud or negligent misrepresentation by the supplier of travel services.”

Common Carrier delays and/or cancellations resulting from Financial Insolvency, provided you purchased this coverage prior to or within 24 hours of your final payment for your Trip;

Global Alert says:

Bankruptcy means the filing of a petition for voluntary or involuntary bankruptcy in a court of competent jurisdiction under Chapter 7 or Chapter 11 of the United States Bankruptcy Code 11 L.S.C. Subsection 101 et seq.

Default means a material failure or inability to provide contracted services.

MH Ross says:

Bankruptcy means the filing of a petition for voluntary or involuntary bankruptcy in a court of competent jurisdiction under Chapter 7 or Chapter 11 of the United States Bankruptcy Code 11 L.S.C. Subsection 101 et seq.

Default means a material failure or inability to provide contracted services due to financial insolvency.

Travelex Select & Travelex Max say:

TRIP CANCELLATION & INTERRUPTION
5. arrangements canceled by a tour operator, cruise line, airline, rental car company, hotel, condominium, railroad, motor coach company, or other supplier of travel services, resulting from Financial Insolvency;

Financial Insolvency means complete suspension of operations due to insolvency, with or without the filing of a bankruptcy petition, whether voluntary or involuntary, by a tour operator, cruise line, airline, rental car company, hotel, condominium, railroad, motor coach company, or other supplier of travel services other than the person, organization, agency or firm from whom you directly purchased or paid for your Covered Trip provided the Financial Insolvency occurs more than 14 days following your effective date for the Trip Cancellation Benefits. There is no coverage for the complete suspension of operations for losses caused by fraud or negligent misrepresentation by the supplier of travel services.

Travel Guard

Travel Guard‘s Certificate says:

“Financial Default” means the total cessation of operations due to insolvency, with or without the filing of a bankruptcy petition by a tour operator, cruise line, or airline provided the Financial Default occurs more than 14 days following an Insured’s effective date for the Trip Cancellation Benefits. There is no coverage for the Financial Default of any person, organization, agency, or firm from whom you purchased travel arrangements supplied by others.

TRIP CANCELLATION & INTERRUPTION
The Insurer will pay this Primary benefit up to the Maximum Limit shown on the Schedule of Benefits if a Trip is delayed, canceled, or interrupted due to any of the following Unforeseen reasons: … (g) Financial Default of an airline, cruise line, or tour operator resulting in the complete cessation of services. Financial Default occurring on or before the Insured’s coverage effective date or less than fourteen days after the Insured’s coverage effective date will not be covered. This coverage applies only if insurance was purchased within fifteen calendar days of Initial Trip payment. (Day one is the date the Initial Trip payment is received.);

Travel Insured says:

Bankruptcy / Default Protection

“Trip Cancellation / Trip Interruption:
Bankruptcy or Default of an airline, cruise line, tour operator or other travel provider (other than the Travel Supplier, tour operator, travel agency, organization or firm from whom You purchased Your Travel Arrangements) causing a complete cessation of travel services more than 14 days following Your Effective Date. 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 You to transfer to another airline in order to get to Your intended destination. This benefit only applies if the Policy has been purchased within 20 days of the date Your initial deposit/payment for Your Trip is received.

Definitions:

“Bankruptcy or Default” means the total cessation of operations due to insolvency, with or without the filing of a bankruptcy petition by an airline, cruise line, tour operator or other travel provider provided the Bankruptcy or Default occurs more than 14 days following Your Effective Date for the Trip Cancellation Benefits. There is no coverage for the Bankruptcy or Default of any person, organization, agency or firm from whom You purchased Travel Arrangements supplied by others.

TravelSafe says:

FINANCIAL INSOLVENCY means the total cessation or complete suspension of operations due to insolvency, with or without the filing of a bankruptcy petition, or the total cessation or complete suspension of operations following the filing of a bankruptcy petition, whether voluntary or involuntary, by a tour operator, cruise line, airline, rental car company, hotel, condominium, railroad, motor coach company, or other supplier of travel services which is duly licensed in the state(s) of operation other than the entity or the person, organization, agency or firm from whom you directly purchased or paid for your Covered Trip provided the Financial Insolvency occurs more than 15 days following your effective date for the Trip Cancellation Benefits. There is no coverage for the total cessation or complete suspension of operations for losses caused by fraud or negligent misrepresentation by the supplier of travel services.


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