Will travel insurance cover an airline going out of business?

Comprehensive travel insurance policies may offer protection if an airline or travel supplier goes out of business. A travel supplier might include airlines, hotels, cruise lines, and tour operators. To be eligible for coverage, you must have purchased your travel insurance within a certain time period after making your initial trip payment.

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What happens if an airline goes out of business?

If your airline goes out of business and cancels your flight, file a claim with your travel insurance. When an airline goes out of business and stops operating, it's referred to as supplier default. Supplier default can apply to companies that provide you with a travel-related service, including airlines, hotels and resorts, cruise lines, and tour operators.

Pro tip:

If you've heard that your supplier is filing for bankruptcy, wait to see if your trip is canceled before you file a claim. Airline bankruptcy doesn't necessarily mean your trip will be canceled — some businesses continue operations after filing for bankruptcy.

How does travel insurance cover an airline going out of business?

Most comprehensive travel insurance plans offer coverage for pre-paid, nonrefundable costs if your travel supplier or airline goes out of business and cancels your booking. Since coverage can differ by insurer and policy, check the terms and conditions for trip interruption and flight cancellation when shopping for travel insurance.

Learn more about how travel insurance works.

When you may not be covered

While supplier default is typically included on comprehensive travel insurance plans, coverage is dependent on each policy's terms. You may not receive reimbursement after your travel supplier or airline closes if:

You purchased insurance too late
Financial default coverage is usually a time-sensitive benefit, meaning you must have purchased travel insurance within a certain time after making your initial trip payment (usually 10 to 14 days) in order to be covered. The policy also needs to have been purchased before there were any announcements about the travel supplier having financial issues.
Your costs are refundable
If you can get your costs refunded after your flight, tour, or trip is canceled, you won't be eligible for reimbursement through your travel insurance.
You purchased insurance directly through the travel supplier
If you purchased trip protection directly through an airline or other supplier at the time of booking, the company may not pay out insurance claims after it goes out of business.

Are there other ways to get reimbursed when an airline is going out of business?

Many travel experts recommend booking vacations with a credit card rather than a debit card as it may offer an extra layer of protection. Anything you purchase with your credit card is covered under the Fair Credit Billing Act, which allows you to dispute a charge when you don't receive a service you paid for. If your travel supplier goes out of business or cancels your trip, get in touch with your credit card company to dispute the relevant charges.

Get travel insurance before your trip

Progressive travel insurance through InsureMyTrip includes the industry's top vacation insurance companies so you can research coverages, compare prices, and choose the best plan for your budget and itinerary.