Which types of compensation do travel insurers expect you to try first?
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Travel insurance operates as a "last resort" indemnity. This means policies typically exclude any costs defined as "recoverable." Under insurance industry standards, a cost is considered recoverable if it could in principle be returned to you by another party, regardless of whether you have already received the funds.
The Principle of "Recoverable" Costs
Insurers distinguish between recovered funds (money already in your bank) and recoverable funds (money you have a legal or contractual right to claim). Your policy will not trigger until you have exhausted all other primary recovery routes.
The Recovery Hierarchy
Before a travel insurance claim can be processed, you are generally expected to pursue recovery in the following order:
Priority
- Service Provider: Airline/Hotel/Tour Operator
Direct refunds for cancelled or moved services. - Statutory Schemes: ATOL / ABTA
Protection for package holiday failures or insolvent travel firms. - Payment Provider: Section 75 / Chargeback
Legal protection via credit card (Section 75) or debit card schemes. - Travel Insurance: The "Last Resort"
Covers the remaining financial loss after all above routes are exhausted.
Notes on this guide:
- This is general guidance based on selection of representative UK travel insurance policy terms from leading insurers.
- This is a summary of common terms. Always read your specific Policy Wording and IPID document. This guide is for information only and does not constitute financial or legal advice.
- This document is based on a detailed, expert review of UK travel insurance policies from March 2026.
- Always read your specific policy documents and contact your insurer or the FOS directly if you have a dispute.