Is Your Cheap Travel Insurance Legal?

At this time of year, New Year's resolutions are a long forgotten memory. The diet you pledged to stick to has been replaced by chocolate, and the strict exercise regime has gone out the window. On the plus side, you can still look forward to your summer holiday. However, travel insurance has gone through some changes in 2009 and, unlike the rest of us, the companies who sell cheap travel insurance stick to their resolutions. So before you take your well earned break, it's worth checking your policy.

As of 1 January 2009, the Financial Services Authority (FSA) took it upon itself to regulate the sale of all cheap travel insurance from all travel agents and tour operators. A lot of tour operators signed up in advance to get FSA approval, but not all operators and travel agents have been FSA approved. It's easy to be confused by acronyms, as a lot of travel agents are members of ATOL or ABTA which gives the impression that they are certified and approved to sell cheap travel insurance.

For clarity, ATOL is the Air Travel Organisers' Licensing which is a part of the Civil Aviation Authority (CAA). ATOL helps to protect travellers abroad by making sure that the tour operator or travel agent they book their holiday with has the financial reserves to compensate their customers, should anything go wrong. If an ATOL approved company goes bust, holidaymakers are guaranteed to get their money back and a flight home should the company collapse whilst a customer is on holiday.

ABTA is the Association of British Travel Agents and is a representative body of 5,300 travel agents and almost 1,000 tour operators. ABTA are a representative body which acts on behalf of its members to ensure high standards of trading practice among travel agents. However, whilst ABTA membership does mean customers will get “choice, value and high levels of service” there is no requirement for ABTA members to provide cheap travel insurance.

In essence, what this means is that whilst carrying the ATOL or ABTA badge might help you source a good travel agent, in reality this has no bearing on their ability to provide you with cheap travel insurance. If you are going to buy a policy, make sure it's from a reputable vendor that has approval from the FSA. Without it, you could be in severe trouble should you have an accident abroad.

Kim has 2 years experience in the travel insurance industry. She enjoys writing articles on various topics.