Will Your Travel Insurance Have Your Back if Your Flight is Overbooked?
Audiences worldwide were shocked this past April by the footage of an American Airlines passenger being forcibly manhandled off his flight to make room for crewmembers. But the underlying reason for the issue is common practice among most major airlines, even if it doesn't usually play out in such melodramatic fashion. To compensate for the passengers who miss their flights and leave empty seats (and missed opportunities for revenue), many airlines will overbook their flights -- that is, sell more seats on the plane than actually are there, assuming some people won't show up. This practice inevitably leads to situations where some unlucky traveller will get bumped off his flight despite having paid perfectly good money to be on it.
So how do we prepare for and mitigate the risk of this happening to us? Some, even many, airlines may find you alternate flight arrangements or offer to compensate you with dollars or miles. However, for those who prefer the certainty of a sure thing, buying travel insurance may seem like a good way to make sure you receive at least some sort of compensation for the hassle and lost time and money. But will your travel insurance plan really have your back if your flight is overbooked? Our team at ValueChampion read the fine print of the policy documents of 12 of the top travel insurance policies in Singapore to find out how insurers address this issue, and which insurers may give you greater peace of mind in case you find yourself shunted off your flight.
So What's the Deal?
While not every insurer will handle the issue of overbooked flights exactly the same way, we found a high degree of consistency in the general conditions in travel insurance policies under which your insurer will compensate you for disruptions to your travel plans due to an overbooked flight.
Typically, insurers stipulate that they will pay a cash benefit if the following conditions apply:
- You were denied from boarding your scheduled flight after having already received confirmation of your reservation by the travel agent or airline.
- You have not received any form of compensation from the airline/transport provider/travel agent used.
- No other alternative transport arrangement was made available to you within 6 hours of the flight's scheduled departure.
- You can present written confirmation/proof from the transport provider/airline of having been denied boarding your scheduled flight due to overbooking.
Assuming all of the above terms apply, the amount of cash benefit you may be eligible to receive will depend on the terms laid out in your travel insurance policy. A key piece of information to keep in mind when shopping for your travel insurance policy is that, while some insurers will allow you to file a claim for flight overbooking under the classification of "Travel Delay," therefore giving you access to the total limit insured under that policy (which could reach several thousands of dollars), is that the length of time that goes by before you are able to find alternative travel arrangements limits how much money you will be eligible to receive. For example, a policy like AIG's cheapest "Classic" plan may technically provide you with up to a limit of S$1,000 of cover for this kind of mishap. But the policy wording specifies that you will only be eligible to receive S$100 for every 6 hour period after the scheduled time of departure for the flight you were bumped off. Presumably (and hopefully), you would not have to wait much longer than 6 hours to be put on another flight, so you'd most likely end up only qualifying to receive a payout of S$100 at best based on the terms of this policy.
Not All Travel Insurance Plans Are Created Equal
Based on our study of 12 major travel insurance providers in Singapore, it is most common for insurers to pay out a maximum of S$100 per insured person for each continuous 6-hour period after the scheduled time of your flight's departure, up to a limit specified on your policy (which varies). But it turns out that some insurers are more generous than others when it comes to compensation for delays or disruptions due to overbooked flights, providing more cover than the industry standard.
Our research indicates that AXA has one of the most consumer-friendly policies toward overbooking. AXA will pay out S$200 per insured person per trip for its cheapest "Essential" travel insurance plan and S$400 per insured person per trip for its more fully-featured "Comprehensive" plan, more than is typical for the industry. Furthermore, AXA says they will pay out this cash benefit if you cannot get alternative transportation that departs within 4 hours of the original scheduled departure time. This is 2 hours fewer than what every other insurer we looked at requires, making it easier for you to fulfill the conditions required to be eligible for the benefit.
Other Singapore travel insurance providers that seem to be a little more generous than typical industry practice include:
- MSIG, which will pay out S$200 for each insured person and a total of S$1,000 for family cover if overbooking causes delays or disruptions to travel plans;
- NTUC Income, which will pay out S$100 per insured person for its cheapest "Classic" plan but S$200 per insured person for its "Deluxe" plan and S$500 per insured person for its "Preferred" plan; and
Below, you can read about each insurer's overbook benefit policy in more detail, based on what wording is available in their online policy documents. If the wording was vague or incomplete on some points, only as much information as was clearly imparted is detailed.
|AIG||Maximum payout of S$100 for every 6 hours of delay as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure, up to total limit of S$1,000 for Classic plan, S$2,000 for Superior plan, S$3,000 for Premier plan|
|Allianz Global Assistance||No specific wording referencing overbooking|
|Aviva||Maximum payout of S$100 for every 6 hours of delay as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure, up to total limit of S$100 for Lite plan, S$200 for Plus plan, S$500 for Prestige plan|
|AXA||Maximum payout of S$200 for Essential plan and S$400 for Comprehensive plan as long as alternative transport arrangement was not made available to you within 4 hours of the scheduled departure|
|Budget Direct||Maximum payout of S$100 across all plans as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure (up to $500)|
|DirectAsia||Maximum payout of S$100 for every 6 hours of delay as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure, up to total limit of S$1,000|
|FWD||Maximum payout of S$100 for every 6 hours of delay as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure, up to total limit of S$300 for Premium plan, S$500 for Business plan, S$1,000 for First plan|
|Etiqa||Maximum payout of S$200 across all plans as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure|
|HL Assurance||Maximum payout of S$100 across all plans as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure|
|MSIG||Maximum payout of S$200 for Standard Plan, $300 for Elite Plan and $400 for Premier Plan, as long as alternative transport arrangement was not made available to you within 6 hours of the scheduled departure|
|NTUC Income||Maximum payout of S$100 for Classic plan, S$200 for Deluxe plan, S$500 for Preferred plan|