Insurer to cover travellers for collapse of wholesaler

By KARYN SCHERER

Insurance company Southern Cross has agreed to come to the aid of travellers caught out by the collapse of an Auckland travel wholesaler.

However, it says the decision is a one-off, and it will not change its policies to cover such situations in the future.

The company, which is best known for its health policies, was criticised by liquidator Graeme McDonald this week.

Mr McDonald, who is handling the collapse of Sun Travel, said he was astonished to find out that some insurers, including Southern Cross, did not have policies that covered the collapse of a wholesaler.

Southern Cross said yesterday that it did not know how many policyholders had been caught out by the collapse.

Spokesman Steve O'Connor said the company had decided the collapse was "completely unexpected" and it would therefore honour eligible claims.

It would also honour any holders of ASB Gold Card policies.

Southern Cross underwrites most credit card travel insurance policies, although it is understood the ASB policy is the only one that does not cover the collapse of a wholesaler.

The company stressed that it was not the only travel insurer without such coverage, although travel agents have noted that the country's largest travel insurer, Mike Henry Insurance, does include such cover.

Mr O'Connor said it was understandable that travel agents would promote Mike Henry policies as the company dealt exclusively with them.

"We feel that travellers would prefer to be fully aware of what cover and terms are available on the market and then make up their own mind as to what suits them best."

Up to 500 travellers are believed to have had their plans thrown into disarray by the collapse of Sun Travel last week. Those with insurance policies that did not include what is known as third-party collapse faced paying twice for their holidays.

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