Financial default coverage in a travel insurance plan generally refers to when a travel supplier with whom you’ve booked all or part of your trip, and to whom you’ve already given payment for their services, has stopped business operations due to financial reasons.

Usually, airlines, cruise lines and tour companies are the kind of suppliers whose financial default would be covered under your travel insurance plan. Financial default coverage reimburses in-full only if you are unable to make alternate arrangements to continue with your travel plans. If you’re able to book another flight, for example, your benefits would then be adjusted according to the specific terms of your policy.


Financial default is not the same thing as bankruptcy. While some travel insurance plans may also provide coverage for bankruptcy, most offer only financial default benefits. In the case of bankruptcy, the company has entered into a legal process with the goal of resolving its financial difficulties and it may not stop providing services.

In financial default, the company ceases to provide any services and stops all operations with no hope of repairing the financial damage. Knowing the distinction between these terms can help avoid any stress during a potential claims process.

Some plans will not cover the financial default of the agency from whom you purchased your land/sea arrangements. Typically, the plan will cover financial default of the cruise line, airline or tour company with which you will be traveling; travel agencies are usually not included.


Financial default coverage is usually a time-sensitive benefit, meaning you have to purchase your travel insurance plan within a specified period of time after making your initial trip payment in order to get the coverage. This time period varies by plan and provider, but is typically around 10-14 days.

In addition, you may be subject to a waiting period after your policy goes into effect. If that’s the case, then you would not be eligible for financial default benefits until after the waiting period had ended.

Finally, some companies only offer coverage for the financial default of select travel suppliers. You can obtain the complete list from your provider if you have any questions about your travel supplier’s eligibility.


Travel insurance is available in many forms, including as a special plan offered to travelers by the cruise lines or booking agencies with whom they’re doing business. While these add-on policies appear to be the simplest way to get travel insurance, they usually don’t include the comprehensive coverage you’d get with a travel insurance plan from a third party like InsureMyTrip. Financial default coverage, in particular, is one item that is frequently not covered by insurance policies you may purchase from a travel supplier.