Many people who have been unable to go on holiday because of the coronavirus outbreak have submitted a cancellation claim to their travel insurer, only to be told that they must try and first get their money back from other providers.
This has caused confusion and frustration around which providers they must try and recover costs from, and why their travel insurance won’t look at their claim until all other avenues have been exhausted.
Here we explain the steps holidaymakers can take to recover any lost holiday costs and at which point customers should contact their travel insurer.
Why do I have to try and get refunds from other providers before I can claim on my travel insurance?
Holidaymakers must try to get their money back through tour operators, airlines and travel agents in the first instance, as these providers have been unable to provide the holiday that the customer paid for.
There are several laws in place which protect customers and their money in these circumstances. For example, if you booked a package holiday through a tour operator, they are responsible for providing you with a refund under the Package Travel Regulations Act.
A package holiday is where you have booked at least two different types of services through a tour operator. For example, flights and accommodation. For information on what a package holiday includes click here.
This act, which came into force in 2018, provides important protection for consumers to cover the unique characteristics of package holidays.
Key protections of this law include:
- Making the organiser liable for the performance of the travel services making up the package (even if performed by third parties).
- Protection against the insolvency of package organisers, ensuring travellers are refunded, or where applicable, repatriated should the organiser go bust.
- Detailed information requirements that make it clear what product the traveller is buying and the associated protections.
Under EU Law, airlines also have a responsibility to fully refund you or provide you with an alternative flight if they cancel your flight. Since the EU 261 regulation was passed in 2004, passengers have been protected against severe flight disruption. The legislation confirms that long delays, cancellations, missed connections and flight re-bookings cause great inconvenience to the passenger, and as such affected passengers should be compensated.
This is why most travel insurance policies would ask that customers try to obtain a refund through other providers as protection exists elsewhere. It may seem like a hassle at the time but it is worth remembering that by recovering costs elsewhere, you will save the cost of your policy excess – which is applied per person.
Which providers should I contact to get a refund from first?
If you have booked a package holiday then you should contact your tour operator for a refund. However, it is worth knowing that many tour operators are currently offering alternative options to a refund, such as the opportunity to rebook your holiday for a later date or a refund credit note.
The reason many tour operators are offering credit notes or ask that you move your holiday is because many businesses don’t currently have the money to provide customers with a cash refund, without going out of business. The majority of tour operators have not yet received the money back from airlines, accommodation providers, and other supplies who have also been affected by the pandemic.
However, customers can reject a credit note and other options and push for a refund if that is their preferred method of repayment. Tour operators are supposed to refund you within 14 days of cancellation, however, given the current global situation, this may take a little longer than usual as companies simply do not have the funds to provide cash refunds.
Airline or accommodation provider:
If you booked your holiday independently then you will need to speak to your airline and accommodation provider about getting a refund. Some airlines are allowing customers to change their flight dates for later on in the year, others are offering refunds.
Accommodation providers are also offering holidaymakers the chance to push back their stay.
Credit card or bank:
If you are unable to get your money back from the tour operator, airline or accommodation provider, and you booked your holiday on a credit card, then you able to claim back costs against your credit card provider under ‘Section 75 of the Consumer Credit Act’. This is providing your holiday cost more than £100.
Those who booked with a debit card may also be able to claim costs back through their bank under a voluntary scheme called ‘Chargeback’.
However, customers will need to speak directly to their card provider to discuss their options in both circumstances. More information can be found here.
What if I am offered an alternative option for a refund?
Whether customers accept an alternative option to a refund is completely down to the individual and their circumstances. However, it’s worth exploring these options if they are available as they may be preferential.
Many tour operators are offering a refund credit note. A refund credit note enables you to rebook your holiday for a later date or receive a cash refund at the expiry date of the credit note. It also retains the financial protection that you had with your original booking. For example, those who booked a package holiday and were ATOL protected will remain protected under this scheme.
Accepting a credit note can be a good way to protect your holiday and also give you something to look forward to during this difficult time; it will also help out your tour operator.
However, if you accept a credit note you will not be able to claim for cancellation of your trip through your travel insurance as the holiday and money is recoverable.
Customers may also be offered the chance to rebook their same holiday for a later date (albeit next year). Of course, travel companies will only allow trips to go ahead when it is safe to do so, and in line with the Foreign and Commonwealth Office (FCO) advice so you can be assured that you won’t be left out of pocket or without a holiday.
These options are also worth considering if you don’t have cancellation cover in your travel insurance policy.
Customers who accept a credit note or rebook their holiday should contact their travel insurer to see if they are able to change their travel insurance dates to suit their new trip. However, it’s worth knowing that if the new holiday is more than 12 months away, you might have to pay a little extra in order to amend your policy.
At what point can I claim on my travel insurance?
Once all of the other providers have been contacted and confirmed that they are unable to provide a refund or alternative option, then you should contact your travel insurer and submit a claim for consideration.
To be able to successfully submit a claim for cancellation you must have cancellation cover included in your policy. This cover may be worded as “If you are unable to go on your trip”. Other facts may also play a part in the eligibility of your claim. For example, the date you bought your policy and what your cancellation cover includes.
You should also check that you have the appropriate cover for claims related to the coronavirus, as some policies may have specific exclusions. Those with cover for “a change in FCO advice” may be able to claim for coronavirus-costs.
However, if you bought your policy around the time that the FCO changed their guidance, then you may have exclusions in your policy which may restrict you from claiming for anything related to the coronavirus.
It’s always worth reading the finer details to find out exactly what cover is included and what exclusions your policy has, as most travel insurance policies list the cancellation reasons that are covered. You can contact your insurance company if you are unsure or have any further questions.
What’s the point of having travel insurance if I have to get a refund from everywhere else?
The purpose of having travel insurance is to protect yourself should something go wrong while you are on holiday. Travel insurance policies have many different and varying aspects of cover depending on the type of policy you purchase. However, all policies will cover you for medical costs should you fall ill abroad (and have declared any existing medical conditions to your insurer beforehand). This is the main reason travel insurance is so important. It’s worth knowing that most good insurers will also cover any medical claims submitted as a result of falling ill with coronavirus while on holiday.
The second reason travel insurance is so important is because it offer protection should you have to cancel your trip. It’s worth knowing that in normal circumstances, when a customer is not able to travel as a result of illness or another insurable reason that is no fault of the tour operators, then the insurer would be responsible for covering these costs. It just so happens that in this circumstance, they would sit behind all other providers given the legislation in place to protect customers.
Of course, the reasons which allow you to submit a cancellation claim will vary on the type of policy you’ve bought. For example, a cheaper policy typically bought on a comparison site may only provide you with very basic cover and be more restrictive in the reasons for which you can claim. They may also have a higher excess, meaning you will receive less back overall.
Whereas, policies that are often bought directly from the insurer (and are usually a little more expensive) may have more cover for events beyond your control. For example, these types of policies may cover you against a change in Foreign and Commonwealth advice. These policies tend to have lower excess as you paid more for the insurance in the first place.