Flybmi collapse: nearly half of travel insurance policies won’t offer protection from airline failures

Published by Stephen Little on 19 February 2019.
Last updated on 19 February 2019

Following the collapse of Flybmi over the weekend, travellers are being urged to check the small print on their travel insurance before they depart as nearly half don't protect against airline insolvency. 

Financial information business Defaqto is warning that passengers could be taking out travel insurance policies that don’t provide them with protection from airline failure.

Defaqto looked at over 1,000 policies covering the whole market and found that 45% of travel insurance policies offer no protection for passengers from airline failure.

It also found that cover for airline failure is offered as standard by 48% of insurance companies and as an optional extra in 7% of annual and single trip policies.

Brian Brown, head of insight at Defaqto, says: “With flights and holidays cancelled as a result of the Flybmi collapse, a lot of people’s holidays will be ruined over the coming months. 

“Anyone who has booked a package holiday with Flybmi, will be fully protected through the ATOL scheme and should not lose out.

"However, those who have booked flights directly and haven’t travelled yet, are at risk."

Flybmi went into administration at the weekend leaving thousands of passengers stranded after all flights were cancelled.

The East Midlands-based firm, which until Saturday flew to 25 cities, blamed the collapse on Brexit uncertainty and rises in fuel and carbon costs.

Customers have been told not to go to the airport unless they have rebooked flights with alternative providers.

Flybmi said that it is not able to purchase, rearrange or reschedule any flights on behalf of customers.

What are your rights?

Credit card customers

Flybmi has told customers who booked directly with the firm using a credit card to contact their card issuer for a refund.

If you booked directly and paid by credit card you may be protected under Section 75 of the Consumer Credit Act 1974.

This gives you protection on purchases over £100 if you use your credit card.

If you paid by debit or charge card you should contact your card issuer for advice as you may be able to make a claim under their charge back rules.

Bookings

If you booked your flights as part of a package holiday, contact the firm you booked with.

If you are ATOL protected, the travel firm is responsible for your flight arrangements and must either make alternative flights available or provide a full refund.

If you are abroad, it should make arrangements to bring you home at the end of your trip.

If you booked your ticket through a travel agent or partner airline you are advised to contact them.

Travel insurance

Customers who have purchased travel insurance should contact their insurer as it may include cover for scheduled airline failure

A policy may simply cover the cost of the original tickets purchased or any unused portion, or the additional cost of purchasing new flights, such as new tickets for travel back to the UK.

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