Holiday Insurance with Airline Failure Cover

Why holiday insurance airline failure cover matters

When you book a package holiday through a UK travel agent, you are usually protected by the ATOL scheme. However, many UK travellers now book flights directly with airlines or through third-party booking sites that do not provide the same level of insolvency protection. If an airline goes out of business, your tickets may become worthless and you could be stranded overseas. Holiday insurance with airline failure cover provides a secondary safety net to help you recover lost costs or pay for new flights home.

• Protects against the financial collapse of a scheduled airline
• Covers flights not protected by the ATOL scheme
• Provides peace of mind for independent travellers
• Ensures you are not personally liable for repatriation costs
• Fills the gap left by many standard 'off-the-shelf' policies

What is typically covered by SAFI

Scheduled Airline Failure Insurance (SAFI) is the technical term for this cover. It usually pays out for the irrecoverable cost of your flight tickets if the airline fails before you depart. If the collapse occurs while you are already on holiday, the policy typically covers the additional cost of a replacement flight to get you back to the UK, up to a specified limit. It is important to check if the cover extends to 'End Supplier Failure', which can also include hotels and car hire companies that go bust.

• The cost of the original unused flight tickets
• Additional costs for a new return flight to the UK
• Reasonable expenses for accommodation while waiting for a flight
• Cover for the insolvency of any scheduled airline
• Protection for connecting flights if part of the same booking

Common exclusions to watch out for

Not every airline collapse is covered by every policy. Most insurers will not pay out if the airline was already in financial difficulty or had entered administration at the time you purchased the insurance. Additionally, if your flight is part of an ATOL-protected package, your insurer will expect you to claim through that scheme first. You generally cannot claim for the loss of air miles or loyalty points, and cover rarely extends to charter flights which are governed by different regulations.

• Airlines already in administration when the policy was bought
• Flights that are already protected by the ATOL scheme
• Claims where you can recover money via Section 75 of the Consumer Credit Act
• Loss of reward points, air miles or vouchers
• Indirect losses such as missed events or pre-paid excursions

Typical costs and pricing factors

Adding airline failure protection to a standard policy is relatively inexpensive, often costing between £5 and £15 as an optional add-on for a single trip. The total price of your premium will depend on your destination, the duration of your trip and your age. Insurers also look at the total value of the flights you are insuring; higher-cost long-haul flights may require a policy with a higher 'sum insured' limit to ensure the full cost is recoverable.

Choosing cover for specific destinations

When travelling to the EU, your Global Health Insurance Card (GHIC) covers medical needs but offers zero protection for airline insolvency. For long-haul destinations like the USA or Australia, the cost of a last-minute replacement flight can be thousands of pounds, making airline failure cover even more critical. Always check the FCDO travel advice for your destination, as insurers may void cover if you travel against government warnings, even if the airline failure is unrelated to the advice.

How to make a claim and required evidence

To make a successful claim, you must provide evidence of the airline's failure and proof that you have not been reimbursed by other means. The Financial Ombudsman Service (FOS) often sees complaints where travellers have not first tried to claim through their credit card provider. You will need your original booking confirmation, proof of payment and any correspondence from the airline or administrators confirming the cessation of trade.

Regulatory context and the role of the ABI

The Association of British Insurers (ABI) notes that while many travellers assume they are covered for everything, insolvency protection is often an 'extra'. The Financial Conduct Authority (FCA) regulates how these policies are sold to ensure they are fair. If you booked with a credit card for a flight costing over £100, you might have protection under Section 75 of the Consumer Credit Act, which insurers will expect you to utilise before they settle a claim.

Practical checklist for travellers

Before you head to the airport, take a few minutes to verify your protection. Ensure your policy explicitly mentions 'Scheduled Airline Failure' or 'End Supplier Failure' in the summary of cover. Keep a digital and physical copy of your insurance certificate and the 24-hour emergency assistance number provided by your insurer.

• Check if your flight is already ATOL protected
• Confirm the SAFI limit is high enough for replacement flights
• Pay for flights over £100 using a credit card for extra protection
• Download your insurer's emergency contact details
• Keep all receipts for any emergency expenses incurred