Consumer Alert / Travel cancellation insurance

Did you know...Travel cancellation insurance companies are capitalizing on the airlines policy to credit your account if you don't make a flight.  You'd think that if you cancel because of illness, that you'd be reimbursed for the cost of the flight.  Not so.  Not if you read the fine print and understand what mitigation of damages means.  It means you have to pay a fee to activate a credit to take another flight within the year.  And then they'll pay you back for the $50 fee to activate the credit. 

What you will likely get reimbursed for is only the cost of the 'change fee' that the airline charges for you to pick up the credit later.

The fine print in the contract is that they will cover you if your flight is non refundable.  The airlines are saying that they credit your account, which means they aren't non refundable.  Even if you choose not to trigger that credit, you won't be reimbursed by the travel cancellation policy.

If you qualify, and should you choose to activate the credit by paying the 'change fee' within one year, they will cover the cost of the change fee.  But only if you pay the change fee.

So before you buy flight cancellation insurance, find out if you don't make your flight, does the airline credit your account for that flight, leaving you the option of paying extra to activate that credit?  If so, all you are insuring is the change fee should you decide to pay for it.

What a scam! And of course, the wording is all in the fine print on the contract...should you read it, and understand what it means, and understand how the airline will treat your cancellation,

What will you get?  If you can prove you were ill or someone died, if you pay a premium of $37 for a $600 flight, you'll get back the $50 you pay should you not be able to make the flight.  Because you had the option to use those credits in the future, even if time limited to one year, and choose not fly with that company again, you should have taken that trip, even if you didn't want to, because if you don't, and you don't pay to mitigate your loss, all you'll get back is the extra $50 you pay to activate your credit. 

Ever wonder if there's collusion between the airlines and the flight cancellation insurance companies?  After all, they do affiliate. What exactly do the airlines get paid by the insurance companies for the priviledge of being the listed agent on their website?

Is anyone at Industry Canada listening?