Trip insurance that covers operator default

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Jul 3rd, 2012, 06:14 PM
  #1
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Trip insurance that covers operator default

If you're booking with a company outside of the US and they go out of business will basic trip insurance that says it covers "supplier bankruptcy or default" reimburse you? Or is there some loophole if you can't "prove" there is 100% cessation of business? I'm imagining how they'd try to get out of it if you can't really prove anything besides the fact that they no longer respond to calls or emails. I've emailed a trip insurance specialist but in the meantime before I hear his response I was wondering if you've had any experience with this topic.

The policies I'm looking at say they won't cover a travel agent's default if you book through them, it only covers a supplier going out of business. So if a company in Africa is providing the safari but booking you in at different lodges does that make them a travel agent rather than an operator or supplier for insurance purposes? I guess I really need to wait and hear back from the expert.
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Jul 3rd, 2012, 09:31 PM
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That's one reason life is simpler without insurance. Please let us know what you learn, thanks.

regards - tom
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Jul 4th, 2012, 07:08 AM
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It was a while back but I did post here concerning a trip I had canceled when the company went out of business. It was an outfit here in the U.S. and my trip insurance did not cover me as they had to declare bankruptcy within a certain number of days after the cancelation. They did not and I imagine it would get even trickier to prove in a foreign country. So, just be sure and read your policy carefully.
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Jul 4th, 2012, 08:33 AM
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I'm a lawyer, used to reading insurance policies, and I think the travel policies are written in a way to purposefully hide the fact that they don't cover very much. I never confirmed this with anyone, but I'm pretty sure the type of coverage you are referring to would cover you if, for example, you had a travel agent ("agent'") book a cruise ('supplier") and the cruise line "ceased complete operations" causing loss of the amount you paid. However, what you described doesn't appear to fit--the company in Africa you book through sounds to me like the agent, and the lodges are the suppliers. So if a particular lodge ceased operations that might be covered, but if the agent did, then I think you are out of luck. If you used a an agent to book with a safari company that has its own ground operations and the ground operator ceased business, that would more likely be covered.

Now, this is all my personal analysis, and I'd love to hear I'm wrong. I do buy trip insurance, but that is mostly to have the medical coverage and evacuation coverage it provides, as well as cancellation for the covered reasons. I usually rely on other methods for mitigating risk of supplier default.

Hope this helps.
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Jul 4th, 2012, 09:11 AM
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In my case, I did have a travel agent book through a cruise supplier. They ceased operation but kept accepting new reservations for future cruises which never happened. I was on the first cruise of the year so the first to be canceled so consider myself lucky that after 6 months I did have my money returned by the cruise company. I would bet some of the later people who signed up did not get their money back. My insurance company insisted they were not responsible from the very beginning unless there was a declared bankruptcy and I believe it had to be done within a certain period after the cruise was canceled.
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Jul 4th, 2012, 01:42 PM
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In the years I've been posting on this forum I can't recall any in-country outfitter (that have to be used for ground operations by law, regardless if booked outside of Africa)... that has gone belly-up.

Have some safari-goers put in claims to their insurer? Yes? For delays due to flights, baggage delay/loss, loss of personal items (your homeowners/renters policies should cover this), interruption of safari due to illness or death at home, own illness or other while on safari, etc... but not 'ceasing of business.'

If anyone can recall such an instance, do remind me!
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Jul 4th, 2012, 02:29 PM
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I cannot recall any case where the agent went out of business AND the client lost out on their trip. The in-country lodge operators, etc. picked up the pieces in one case where a US operator and former poster here went kaput. But the clients ended up ok.

On my first Africa trip in 1994 I encountered people who had booked with a US agent, Flamingo, that suddenly ceased to exist and the clients were in Kenya with meaningless vouchers because Flamingo had never forwarded the money. The reason I encountered these people was because the places I was staying were putting them up and providing services anyway. Similar to the first instance.

Leslie S, I hope this is all hypothetical and not something you are actually experiencing.
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Jul 4th, 2012, 02:30 PM
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Hmmm. Confusing. I think maybe the "cancel for any reason" provision might be a way to cover that situation (but I'm not a lawyer and not used to reading insurance policies!) but then you're getting into a pretty hefty premium. The other question is what does a credit card cover in that kind of situation. I'll be asking Capital One about that just to see what they say.

I always buy trip insurance - primarily for medical coverage like you traveler318. I've never worried about a company going out of business before and in this case I have no reason to doubt the company. I just started wondering "what if?"....mainly because the deposit will be paid over a year in advance. A lot can happen in a year!
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Jul 6th, 2012, 08:43 AM
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So just as an update: I did talk to Capital One and was assured that if I charge a deposit today and the company goes out of business before the trip I would be able to dispute it and get fully credited. I tried to ask every question I could think of to rule out a loophole and it sounds like that is a viable option.

I'll still get trip insurance but mainly for medical emergency/evacuation reasons and not worry about the 'cancel for any reason' provision which would jack up the cost by 50%.
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Jul 6th, 2012, 08:49 AM
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atravelynn, i didn't see your post above until just now - yes it's only hypothetical. When I told the TO in the US I got a quote from that I was going with the other country because the price was lower he mentioned concerns about booking with an African company and what would happen if they went under.

I don't have any reason to think this company is on the brink but just out of an abundance of caution I'll use my c/c and pay the extra fee for that and buy some peace of mind. The trip insurance route seems dodgier - they may need a higher level of proof of cessation of business and also do not insure for travel agent bookings (only suppliers are covered) which this Ugandan company might be considered since they are booking us in at different lodges.

TMI, right?!!
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Jul 6th, 2012, 01:36 PM
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Leslie, are you sure the African tour outfitter will accept credit card for deposit and final payment? Most don't, though some that do will assess a fee for use of plastic which you seem aware... so then, go with your gut.
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Jul 6th, 2012, 01:40 PM
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Came across the below link regarding 'low-balling' cost of a trip for reduced premium... interesting read:

elliott.org/the-troubleshooter/… .
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Jul 6th, 2012, 06:44 PM
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The TO told you to be concerned about an African company going out of business? And what would happen if your American tour operator went under - you'd be lucky to get 10¢ on the dollar!
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Jul 6th, 2012, 07:07 PM
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You could post the name of the company you are wondering about and get feedback.

Glad it is only a theoretical question.
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Jul 7th, 2012, 05:08 AM
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sandi - yes this company does take c/c payments with an added 4% fee. That link of your just took me to his website but to deadend page.

sf7307 - true but one difference is with trip insurance needing to see proof of bankruptcy -- maybe you could show that for a US company but not foreign. Anyway, moot point for now if my c/c will reimburse if the service is never received.

The company I'm booking with (Churchill) I've only read very good things about and have no sense that anything could go wrong. I guess just in general, I'm trying to protect against the 'what ifs' which I normally do with trip insurance.

4% is not nothing but to buy some peace of mind it's not awful.
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Jul 7th, 2012, 11:11 AM
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Leslie - sorry about that, copied from another site, but in summary about travelers who instead of insuring for their entire trip of $10,074, only did for $10K even*... ran into issues with the insurance company. It was eventually worked out, but an interesting occurence we should remember.

*as if over $10K the premium increased a bit.
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Jul 7th, 2012, 01:46 PM
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Oh yeah, I remember something about that - the guy at the trip insurance website I buy through was explaining to me if I didn't cover the entire expense there were certain things the policy would then not pay for.

I'm considering just getting an annual policy for medical coverage while traveling and not insuring things like trip cancellation or flight delays. I don't want to jinx myself but in perhaps 20 trips over the years with insurance (at about 5% of the trip cost) we've only ever put in 2 small claims and one was denied.
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Jul 7th, 2012, 07:21 PM
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Leslie, when we went to Egypt, we also opted to put the charges on a credit card and pay the fee, which was 3% at the time - I agree, that was worth the peace of mind.
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Jul 8th, 2012, 06:47 AM
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Leslie -

For Medical/Evacuation ONLY, that even within the US if you/family travel often, take a look at MedJet who has an family policy for about $350/annual. Then, if/where/type of travel you only have to take cancel/interrupt, if you wish.
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Jul 8th, 2012, 11:32 AM
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Great -- thanks sandi!!
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