FLYBE passengers have been dealt a blow as experts warn over half of travel insurance policies offer no protection for airline failure.

The budget carrier ceased trading with immediate effect in the early hours of this morning, March 5.

Flybe had held crisis talks with the government over the past few months, but was unable to secure a rescue package.

It partly blames coronavirus for dwindling sales with passengers afraid to fly.

All Flybe flights and those operated by its sister airline Stobart Air have now been cancelled as a result.

But financial ratings firm Defaqto says 51 per cent – over half – of travel policies on the market won't cover airline failure.

Of these standard policies, 32 per cent also fail to give the option to buy add-on airline failure cover.

And where standard policies offer add-on cover, 81 per cent of these won't protect airline failure.

Brian Brown, consumer finance expert at Defaqto, said: “With flights and holidays cancelled as a result of the Flybe collapse, a lot of people’s holidays will be ruined over the coming months.

"Airline failure is not covered as standard on over half of travel insurance policies as the risk is usually relatively small."

Stuart Lloyd, travel expert at insurer Columbus Direct added: “If you’re a Flybe customer, check the small print of your travel insurance policy and scan for any mention of ‘Scheduled Airline Failure Insurance’ or ‘End Supplier Failure Insurance’.

"If you see this included then you should be covered. Airline failure is unfortunately becoming more common, but this type of cover is not provided by all travel insurance policies."

UK airline regulator, the Civil Aviation Authority (CAA), says travel policies covering airline failure typically pay out for the cost of the original tickets purchased or any unused portion.

They may also cover travellers for the additional cost of purchasing new flights, such as tickets for travel back to the UK.

If you booked through a travel agent or ticket agent you might also have been provided scheduled airline failure cover, so check with them first.

What if I'm not covered by insurance?

If you're not covered by your insurance, you do have a few other options.

Packages trips tend to be covered by ATOL (Air Travel Organiser's Licence), which must organise alternative flights or provide a full refund.

If you're stuck without a return flight, it also has to ensure you can make it back home.

For those with no travel insurance or ATOL protection, if you paid on credit card and the flights cost more than £100 you may be able to get a refund from your card provider under Section 75 of the Consumer Credit Act.

For bookings under £100 on credit card or bookings made on debit card, you may be able to get a refund from your card provider under its Chargeback scheme.

Some may ask for what's known as a "negative response letter" confirming Flybe has gone bust, which the CAA says it will upload to its website shortly.

If all fails, you'll have to register with Flybe's administrator as a creditor but you'll be just one in a long line of people owed cash by the firm and you're not guaranteed to get your money back.

For more information, see our full Flybe flights refund guide.

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