On Monday May 8, President Joe Biden proposed a new rule that could change what happens when flights are canceled, at least on US-based airlines. The rule, which Biden laid out in remarks at the White House, would require US airlines to reimburse travelers for the cost of hotels, transportation, meals, and rebooking fees, as well as give the customer their money back for the cost of the canceled ticket when a flight is canceled due to an issue with that airline.

Biden stated during the remarks, "Later this year, my administration will propose a historic, new rule that will make it mandatory, not voluntary, but mandatory, for all US airlines to compensate you with meals, hotels, taxis, rideshares, rebooking, food, fees in cash, miles, and/or travel vouchers whenever they're the ones to blame for the cancellation and delay, and that's all on top of refunding the cost of your ticket."

Currently, most US-based airlines only offer compensation for the price of the ticket in the event of a cancellation. And many airlines attempt to offer this compensation in the form of vouchers rather than an actual refund. If implemented, this rule could change that, as it would guarantee a refund for the cost of the ticket, as well as for additional expenses incurred due to the cancellation. 

In the meantime, the president announced that the government is launching a new website where travelers can view and compare the reimbursement policies of different airlines: flightsright.gov. 

How the Biden Air Travel Compensation Announcement Impacts Travel Insurance

One of the main reasons people buy travel insurance is for the trip cancellation benefit, in which you can get reimbursed for your prepaid, nonrefundable expenses if you have to cancel your trip for a covered reason. The Biden announcement obviously begs the question of whether or not travel insurance will still be necessary if the cancellation rule is implemented. 

The answer is a resounding yes, and here’s why:

• The proposed rule will only impact US-based airlines. If you’re flying from anywhere to anywhere on an airline that isn’t based in the US, it may be exempt from this rule.
• The rule only covers reimbursement due to a flight cancellation or delay. If you have to cancel your trip due to a personal health issue, a death in the family, a natural disaster that damages your hotel, etc., it wouldn’t apply. Travel insurance can still potentially cover you in these situations.
• Travel insurance offers other valuable benefits such as trip interruption coverage, emergency medical coverage, and even lost passport assistance or emergency cash transfer with some plans. The canceled flight rule wouldn’t address any of these common travel issues.

So, while many travelers who plan to fly on US-based airlines are undoubtedly hopeful about the proposed new reimbursement rule for canceled fights, it doesn’t in any way diminish the importance of shopping for the right travel insurance plan prior to any trip.