Don't be caught short when it comes to insurance

The recent demise of airlines such as Zoom and XL has left Brits worrying about their travel insurance.

moneysupermarket.com reveals only four insurers offer cover for scheduled airline failure as standard and warns travellers not to be caught short.

For extra peace of mind another insurer, Swiftcover, does offer scheduled airline cover as an add-on to your existing cover, for an additional £11. Budget airlines Ryanair and easyJet also offer scheduled airline failure, as a £1 add on and as standard respectively, when buying insurance alongside flights directly.

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

Are you covered if your insurer fails?

The rescue of giant US insurer AIG last week highlighted another threat to the safety of our insurance premiums. Should a large insurer face insolvency, the FSCS, working alongside administrators, would aim to compensate people for premiums already paid, and take over paying out for any existing claims. It is, however, then down to the policyholder to arrange new cover with a new provider or risk being uninsured.

Peter Gerrard continued: "The collapse of any major insurer would have major implications for the insurance industry, and while AIG was rescued following emergency funding from the US Government, 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.

"As a general rule I'd advise consumers to ensure all their insurance policies are up to date, and provide the correct level of cover for their circumstances. In the current market climate it's also advisable for policyholders to understand who underwrites their cover; it is a little known fact for example that big name insurers Sainsbury's and Birmingham Midshires are underwritten by Halifax."