Two-thirds of travel insurance policies (65%) do not offer cover for independent holidaymakers in the event of accommodation or excursion providers going bust, according to financial information provider Defaqto.
Protection against airlines going under is not provided as standard either, with a sizeable 41% not offering this valuable cover.
Defaqto is issuing its warning ahead of a new EU directive which comes into force on 1 July. The new regulations are intended to increase protections provided for holidaymakers.
Under the current system, people who buy package holidays from travel agents are protected if the airline or accommodation supplier goes bust: they will get a free refund or, if they are on holiday when it happens, have return travel arranged for them on their behalf.
However, from 1 July this will be extended so that holidaymakers who purchase travel services such as flights and accommodation from a single website, call centre or shop will be protected. In some cases these may not technically be considered a package as the provider could be aggregating services from a variety of suppliers.
Independent travellers who book different elements of their trip from different websites or agencies will not get any further protection and it is this type of holidaymaker that needs to take additional care when selecting a travel insurance policy.
Those holidaymakers who have already booked a trip and purchased travel insurance should double check what they are and are not covered for.
Brian Brown, head of insight at Defaqto, says: “The way that we travel has fundamentally changed, with people now taking more control of their holidays and booking directly. The new EU ruling is good news for those who book all of the elements of a trip through the same website or agent as they will get the same protection as with a package holiday. However, this still leaves a large number of holidaymakers without protection if they book any elements separately, which they are often likely to do.
“If you are booking any elements of your holiday directly or through different agents or websites, then look for travel insurance that includes ‘financial failure’ cover. This cover is similar to airline failure cover but for the non-flight elements, such as accommodation and excursions and is designed to cover independent travellers. You should also always pay with a credit card if possible for additional protection.”