Moneysupermarket.com recommends that those travellers who are concerned about whether or not they could afford to foot the bill for more flights in their airline went bust should consider using a travel insurance provider that offers protection for failed airlines and other travel operators.

Only four insurance providers offer cover for scheduled airline failure as standard, so moneysupermarket.com warns flyers to check their policy so as not to find themselves high and dry – either before they even leave on their holiday or when they find themselves in a foreign country with useless return tickets.

Other airlines offer cover for scheduled airline failure as an optional extra, such as Swiftcover which offers it for just £1 more, which could prove to be a valuable investment for those affected by failed travel operators.

“It’s surprising to see there are only a handful of insurers at the moment offering cover for scheduled airline failure as standard” said Peter Gerrard, head of insurance research at price comparison website moneysupermarket.com.

Mr Gerrard urges travellers: “don’t assume you will always be covered – it’s important to read the small print of your policy. As the significance of this type of cover becomes more apparent, the good news for travellers is in the future more insurers will recognise the value of scheduled airline cover and add it to their policies, albeit at a premium.”

Meanwhile, the problems being felt in the wider economy are causing concern about what would happen if an insurance company faced bankruptcy, but Brits can rest assured that premiums already paid are protected by the Financial Services Compensation Scheme (FSCS), which would compensate people in the event of a failed insurer.

“The collapse of any major insurer would have major implications for the insurance industry,” Mr Gerrard continued, and “its understandable Brits are concerned about what to do if an insurer fails. The FSCS’ role is to protect policyholders, but in the event of an insurer going bust, people’s premiums will be caught up in the hands of the administrator. With lots of claims to process, it could take a long time to get any money back and you’ll be uninsured until you find alternative cover, so acting immediately to re-insure yourself in this situation is crucial.”

© Fair Investment Company Ltd