What are your rights when your travel plans go belly up?

The recent collapse of UK global travel group Thomas Cook, which left hundreds of thousands of holidaymakers stranded, highlighted the issue of travel insurance. Travellers may not be aware of the limits around travel insurance, which has exclusions depending on the circumstances surrounding the cancellation of the trip.

Claiming on travel insurance

Most travel cover does not protect against cancelled services and not all policies include cover for travel supplier insolvencies.

Jason Veitch, head of travel insurance at Travel Insurance Consultants, says: “There will never be a policy that will assist a policyholder absolutely. Sometimes the risks are not affordable or just not quantifiable.”

When you book a flight or accommodation with your credit card, you receive free travel insurance. However, this insurance focuses primarily on issues related to health or injuries – it does not cover you if the flights or accommodation are cancelled by the provider, says Cilliers Kriel, the CEO of the credit card division at FNB.

“Our customers are, however, covered for cancellations if it is necessary for them to cancel their journey prior to departure as a result of unforeseen and unexpected circumstances such as sudden death, illness or injury of themselves, their travel companion, immediate family member or business associate.

“Customers are also covered if the scheduled departure of their public conveyance transport is delayed for at least six hours due to any cause outside of their control.”

Even if you have paid for top-up cover, your protection will be limited. According to the terms and conditions in Travel Insurance Consultants’ contracts, comprehensive cover may include a claim for a missed connection and a limited amount specified in your policy if the travel supplier is insolvent, however, it does not include the insolvency of a travel agent or tour operator, or if the loss is recoverable by other legal means.

Refund via your credit card

Your best bet when a supplier cancels a flight or goes insolvent is to use your credit card for a chargeback, which forms part of the Visa and Mastercard rules and is an option that can be used by the bank to remedy a disputed card transaction. This could apply in a liquidation situation like Thomas Cook’s, or where an airline cancels flights, which happened with CemAir in December. The airline had to ground all its flights after the SA Civil Aviation Authority suspended its air operator certificates. Many disgruntled customers are still waiting for their refunds.

Cowyk Fox, the managing executive for everyday banking at Absa, says that, should merchants not deliver goods and services as promised, the customer can claim a chargeback.

“In essence, a chargeback prevents customers from suffering financial loss and engaging in lengthy disputes with merchants – the bank takes care of this within a clearly defined process.

“Generally speaking, where a merchant has not delivered a service or product paid for by a card, there would be a chargeback right that can be processed to the merchant’s acquiring bank. Typically, chargebacks are applicable from the point at which the service was to be delivered or the point of liquidation,” says Fox.

Kriel advises customers to log a card dispute with their bank, accompanied by all supporting documentation.

“The bank will then assess the claim and determine if the claim satisfies the requirements for recovery through a chargeback process.

“It is important for a customer to immediately notify the bank of the disputed transaction to improve the chances of recovering funds as the dispute and chargeback process is governed by specific timelines from the transaction date, depending on the nature of the transaction. As there are several chargeback options accompanied by different rules determined by the different card associations, it is recommended that customers share as many details as possible with the bank when logging the dispute,” says Kriel.

FNB offers customers the ability to log dispute claims using the FNB banking app.

Fox says customers who were financially affected by the collapse of Thomas Cook or its affiliates can email for help with the chargeback process.

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