Tour operator failure 'not always covered'

Many insurance providers will not pay compensation in the event of operator or airline bankruptcy, it has been reported.

Two prominent examples in recent weeks are Zoom and XL, which became the 24th and 25th airlines to go bust this year, respectively.

Thousands of passengers have been stranded due to company insolvency, and one expert body believes holidaymakers should protect themselves from such incidents.

Malcolm Tarling, a spokesman for the Association of British Insurers (ABI), said: "Most, but not all, standard package travel policies do not cover failure of tour operator or air carrier.

"Typically, cancellation is covered when specified events occur, such as illness of yourself or a close relative, jury service or being made redundant."

Mr Tarling adds that passengers can guard themselves from losing cash as a result of insolvency by making sure their travel insurance policy covers them in all circumstances.

The ABI represents around 400 insurers, which cover around 94 per cent of insurance services sold in the UK.