Wednesday 17th September 2008
by Bob Bardsley
Know Your Money Editor
Holidays are seen by many people as a chance to put aside the stress of everyday life and take the chance to unwind. So when you're out buying your sun cream, buying comprehensive travel insurance could be one of the last things on your mind. But the recent collapse of XL Leisure Group may have made many holidaymakers more aware of the risks to which they might be exposed while far from home - and the differences between policies from different providers.
While XL Leisure Group pointed out that its subsidiaries in France and Germany continue to operate as normal, that may come as cold comfort to UK travellers left with no flights - or the potentially more distressing position of having no flight home at the end of their holiday. XL Leisure Group told those who booked their flights directly, rather than through a travel agent, that they would be ineligible for a refund and would have to await the assistance of the Civil Aviation Authority (CAA). Those who preferred to book their own replacement flight were also told not to expect a refund from the CAA on arrival back in the UK.
How am I protected?
Even without travel insurance, there are still some ways in which UK residents might find they were protected against the collapse of XL - or of any other airline or leisure group that has gone bust. Insurance provider direct line listed these following the downfall of the operator in light of the fact that its own policies offer no protection as standard for the failure of an airline.
Air Travel Organisers' Licensing, or ATOL, is perhaps the most direct protection offered to travellers by the industry. The scheme aims to pay out to cover the costs of anyone left stranded or unable to travel who booked a package holiday through a licensed travel agent. It does not, however, include protection for anyone who booked directly with the airline.
Travellers who book direct using a credit card are given the standard promise put in place by all credit card providers. Whether buying goods such as a new car or washing machine, or services such as travel on an aircraft, if your purchase fails to materialise you may be able to claim the money back from your lender.
How can I get protection?
While the above options may help Britons who would otherwise have lost money through the collapse of XL, they do have clear limitations. The question for many might be that of why airline failure is not protected as standard on travel insurance policies. In fact, the answer is that it sometimes does come as a standard term - such as on travel insurance from the Post Office.
The insurer's policy summary includes up to £1,500 reimbursement should the airline with which the holidaymaker is scheduled to travel go out of business. This comes with no excess to pay, meaning the full amount should be recouped. Other areas protected by travel insurance from the Post Office include mugging, lost passports and the arguably wide-ranging category of "catastrophe". With single or multi-trip policies available, the firm might have the right product on offer for regular jetsetters or those heading off on their two-week trip of the year.
What about other costs?
Among the associated outlays that consumers may have had to meet in relation to XL's failure is a fairly obvious but potentially overlooked issue - money itself. Foreign currency is something many travellers are likely to obtain in advance - but you could be left needing to pay commission to convert those euros or dollars back into pounds if your holiday is cancelled.
Luckily for M&S Money customers, they will not be left out of pocket due to XL's collapse. The financial services provider explains that anyone who has been unable to use their funds due to the cancellation of their flight can exchange it back into pounds at no cost. In order to do so, the full amount which was originally obtained must be returned to M&S Money - and the offer only applies to those directly affected by the XL situation.
Fraser Millar, head of travel services at M&S Money, says: "By offering to refund the foreign currency in full at the same rate at which they bought it, we are hopefully taking away some of the inconvenience caused to M&S customers." The deadline for changing money back under the special offer has been set at the close of business on Tuesday, September 23rd.
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