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.
It Matters Who You Get Your Trip From
You buy your trip directly from the travel supplier or use a third party:
CSA Freestyle Luxe, Travel Guard, Travel Insured and TravelSafe cover you if you buy your trip directly from the travel supplier (ie - no third party) and / or if you use a travel agent.
Travelex requires you use a third party:
You are only covered for Supplier Financial Default when you arrange travel through a third party like a travel agent or an online travel supplier. If you buy your trip directly from the travel supplier (ie - no third party), you won't be covered for Supplier Financial Default.
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, Travelex, Travel Guard, Travel Insured and TravelSafe
Provider (the link goes to our summary page) |
Supplier Financial Default coverage |
CSA Freestyle Luxe only |
You can get your travel directly from the travel supplier or book through a travel agent |
Travelex |
You have to go through a third party (this means it doesn't cover you if you book your trip directly with the travel supplier) |
Travel Guard |
You can get your travel directly from the travel supplier or book through a travel agent. |
Travel Insured |
You can get your travel directly from the travel supplier or book through a travel agent |
Travel Safe |
You can get your travel directly from the travel supplier or book through a travel agent |
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:
You have to insure at least your trip's full prepaid, non-refundable cost (you can't round it down). and
You must get your travel insurance in the first 14, 15, 21 or 30 days after your first trip payment date (Travel Guard = 14 days, TravelSafe = 15 days, Travel Insured WTP = 21 days and Travel Insured Gold = 30 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.
Trip Cancellation Benefits: Bankruptcy or Default of an airline or cruise line, or tour operator or travel supplier (other than the tour operator or travel agency from whom the Insured purchased their travel arrangements) causing a complete cessation of travel services more than 14 days following the Insured's 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 the Insured to transfer to another airline in order to get to the Insured's intended destination. This benefit only applies if the policy has been purchased prior to or within 24 hours of the Insured's final payment for the Covered Trip;
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 the inability to provide contracted services due to a material financial failure
TRIP CANCELLATION & INTERRUPTION
(h) Bankruptcy and/or Default of Your Travel Supplier which occurs more than fourteen (14) days following Your Effective Date. Coverage is not provided for the Bankruptcy or Default of the agency from whom You purchased the Land/Sea Arrangements. Your Scheduled Departure Date must be no more than twenty-four (24) months beyond Your Effective Date. Benefi ts will be paid due to Bankruptcy or Default of an airline only if no alternate transportation is available. If alternate transportation is available, benefi ts will be limited to the change fee charged to allow You to transfer to another airline in order to get to Your intended destination.
Default: means a material failure or inability to provide contracted services due to financial insolvency.
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.
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.);
Bankruptcy / Default Protection
"Trip Cancellation / Trip Interruption:
Bankruptcy or Default of Your Travel Supplier that solicited this protection plan from whom You purchased Your Land/Sea Arrangements. 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. You must purchase Your plan within 14 days of Your initial Trip deposit.
Definitions:
"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 U.S.C. Subsection 101 et seq.
"Default" means a material failure or inability to provide contracted services due to financial insolvency.
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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