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No travel insurance covers agent collapse, says CHOICE

June 4, 2015 Headline News, Insurance 2 Comments Email Email

egtmedia59The consumer group CHOICE has just published a report headlined: “Protect your holiday savings when using a travel agent”.

“Is your money secure if your travel agent isn’t?” the report asks rhetorically. And the answer is not reassuring.

“As it stands, there is no travel insurance policy that covers the collapse of a travel agent,” CHOICE writes bluntly.

“Less than a third of the insurers in the most recent travel insurance review provide limited cover for the insolvency of a travel services provider such as an airline, hotel, bus, or car rental agency.

“And two travel insurers, Aussietravelcover and CHI Travel Insurance provide cover if a specified list of travel wholesalers or tour operators, such as Qantas Travel and Scenic Tours, go bust but none cover the collapse of a travel agent.”

The reliability of agents is under increased scrutiny after CTS Travel Services in Melbourne went down. The agency, ATAS-accredited, owes consumers thousands of dollars and they may never see their money again.

The CHOICE report starts ominously: “Travel agents can take the hassle out of  scouring flights and accommodation online by doing the hard yards for you, but some travellers are out of pocket thousands of dollars following the collapse of three travel agents so far this year.

“What’s more, consumers are often surprised to find out that travel insurance doesn’t cover the collapse of a travel agent.”

The report goes on from there, suggesting “two actions to take if your travel agent goes belly-up, plus a tip for protecting yourself before it happens”.

The precautions are credit card chargebacks, the Travel Compensation Fund (though CHOICE of course points out that the TCF was abolished in July 2014, so is a help only to those who made a booking through a travel agent before 1 July 2014); and finally travel agent protections: “Ask your travel agent if they have consumer protections in place such as insolvency insurance that will protect you in case they go broke.”

The report mentions some positive points, like the helloworld Customer Protection Policy.

Anyone interested in reading it can do so here:

For the public, such articles bring a sense of disquiet. The possibility that a travel agent may “go belly up” or take a “permanent holiday” (two colourful terms the CHOICE report uses) is hardly likely to reassure anyone thinking of putting some money into a travel booking.

The fact that the TCF has passed into history and many bookings are at consumers’ risk seems only now to be sinking into public consciousness.

Written by Peter Needham

Currently there are "2 comments" on this Article:

  1. stingforever says:

    …..i suggest banks should play an escrow-ish role in protecting consumers money… any monies paid to agents by consumers must be deposited to a bank account and the amount would be released only to agents at the end of the consumer travel date… so when agents go belly up consumers can get their money back from the bank or can continue their travel undisrupted as airlines and hotels can claim from the bank… you don’t need to resort to insurance as insurance companies are not reliable anyway… they don’t tell you the whole story.. it’s up for you to read the fine prints which are so tiny and fine you don’t want to read them…

  2. AGentGerko says:

    Is this the report that was paid for by millions of TCF dollars that were contributed by travel agents? So our money was used against our will to come up with a report that pushes clients towards self-booking and away from travel agents.

    Of course the TCF did cover against any agent collapse. How advantageous that the Choice report does however compliment one groups protection policy, and that group has three members on the AFTA board.

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