Updated airline cancellation, delay refund rules to have limited impact on travel insurance
The transportation department’s updated rules will provide automatic refunds for canceled and significantly delayed flights.
Starting later this year, airlines will be required to provide automatic cash refunds when a flight is canceled or significantly changed, checked bags significantly delayed or if extra airline services, such as Wi-Fi, become unavailable after purchase, according to updated rules from the Department of Transportation (DOT).
The rules were updated to clarify when an airline must provide refunds. Prior to the update, air carriers set their own standards for when refunds would be issued. The department received consumer complaints claiming that airlines would revise and apply less consumer-friendly refund policies during periods that saw higher volumes of flight cancellations and changes.
Passengers will receive refunds if their flight is cancelled and they do not accept offers for alternative transportation or travel credits. The rule also applies to significantly changed flights, which includes:
- Departure or arrival times that are more than three hours domestically and six hours internationally.
- Departures or arrivals from a different airport.
- Increases in the number of connections.
- Instances where passengers are downgraded to a lower class of service.
- Connections at different airports or flights on different planes that are less accessible or accommodating to a person with a disability.
The new rules will have a minimal impact on travel insurance and travelers insuring their trips, according to Jenna Hummer, public relations manager at travel insurance aggregation site Squaremouth.
The refund rules only cover travelers if their flights are delayed or canceled by the air carrier, she says, explaining most travelers purchase insurance in the event they need to cancel their plans or experience a medical emergency during their trip.
According to a survey from Squaremouth, less than 14% of travel insurance buyers said their main concern was their airline delaying or canceling their flight.
“While the DOT changes may cause some travelers to decide not to insure their airfare costs in order to lower the cost of their premium, they would not be refunded for the cost of their airfare should they need to cancel for medical reasons or other covered reasons other than delay of a carrier,” Hummer says.
The updated refund rules could have a very minimal impact on travel insurance claims, according to Hummer. Among Squaremouth’s claims for 2023, 14% were to cover travel delays and 9% covered missed connections.
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