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Risks of paying in full


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Hi,

 

New to Silversea and thinking of paying in full now for a Dec 2022 cruise.. I'm ok with the cancellation conditions, but concerned about what  would happen if the case of insolvency given the current global situation. A quick search on travel insurance suggests that they don't cover insolvency to the value of the cruise. Any thoughts appreciated.

Edited by Redking
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I’ve never done EBB because IME it is often available right up until final deposit is due and often at lower $ than the 10% off quite sometime in advance.  I’ve found playing on the Stockmarket to be a better option 

 

I feel it is a suck you in situation 

 

OTOH

 

if you really want to lock in a particular suite, are happy that if prices drop it is their discretion how they recompense then it may be risk worth taking 

 

also don’t forget we in the “bubble” may not be able to access a cruise due to our governments which means it may be harder to secure a refund/change 

 

 

Edited by MrsWaldo
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19 hours ago, Redking said:

Hi,

 

New to Silversea and thinking of paying in full now for a Dec 2022 cruise.. I'm ok with the cancellation conditions, but concerned about what  would happen if the case of insolvency given the current global situation. A quick search on travel insurance suggests that they don't cover insolvency to the value of the cruise. Any thoughts appreciated.

 

We have a boatload (sorry, couldn't resist 😉) of money riding on an Antarctica cruise in December, which was rolled over from an originally-planned December 2020 trip. So I'm certainly nervous about the possibility of bankruptcy if the timeline for the resumption of cruising pushes farther into the future. But we haven't cancelled. Yet.

 

In the discussions on this subject earlier during the pandemic, there was no unanimity of opinion on the topic. It will all depend on the details of what happens to the cruise line which goes under. Will it sell to another company? Will creditors take over and run the company as an ongoing cruise line? What country(ies?) laws' of bankruptcy come into play? If someone keeps the ships running, will they honor existing bookings to build/retain customer loyalty, or wipe them out? Or will the ships be sold for scrap and shut down? There's just no way to predict how this might play out.

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Thanks folks, points very well made. Decided  to hold off for now. We have a fcc with Celebrity which might be our safer option at the moment.

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On 1/11/2021 at 1:58 AM, Redking said:

Hi,

 

New to Silversea and thinking of paying in full now for a Dec 2022 cruise.. I'm ok with the cancellation conditions, but concerned about what  would happen if the case of insolvency given the current global situation. A quick search on travel insurance suggests that they don't cover insolvency to the value of the cruise. Any thoughts appreciated.

There are travel insurance policies  that cover travel companies that default...

I cut and pasted this from Insure my Trip website:

 

Joseph

 

Financial default coverage in a travel insurance plan generally refers to when a travel supplier with whom you’ve booked all or part of your trip, and to whom you’ve already given payment for their services, has stopped business operations due to financial reasons.

Usually, airlines, cruise lines and tour companies are the kind of suppliers whose financial default would be covered under your travel insurance plan. Financial default coverage reimburses in-full only if you are unable to make alternate arrangements to continue with your travel plans. If you’re able to book another flight, for example, your benefits would then be adjusted according to the specific terms of your policy.

Clarifying "Financial Default"
Financial default is not the same thing as bankruptcy. While some travel insurance plans may also provide coverage for bankruptcy, most offer only financial default benefits. In the case of bankruptcy, the company has entered into a legal process with the goal of resolving its financial difficulties and it may not stop providing services.

In financial default, the company ceases to provide any services and stops all operations with no hope of repairing the financial damage. Knowing the distinction between these terms can help avoid any stress during a potential claims process.

Some plans will not cover the financial default of the agency from whom you purchased your land/sea arrangements. Typically, the plan will cover financial default of the cruise line, airline or tour company with which you will be traveling; travel agencies are usually not included.

Eligibility Requirements
Financial default coverage is usually a time-sensitive benefit, meaning you have to purchase your travel insurance plan within a specified period of time after making your initial trip payment in order to get the coverage. This time period varies by plan and provider, but is typically around 10-14 days.

In addition, you may be subject to a waiting period after your policy goes into effect. If that’s the case, then you would not be eligible for financial default benefits until after the waiting period had ended.

Finally, some companies only offer coverage for the financial default of select travel suppliers. You can obtain the complete list from your provider if you have any questions about your travel supplier’s eligibility.

Third-Party Travel Insurance
Travel insurance is available in many forms, including as a special plan offered to travelers by the cruise lines or booking agencies with whom they’re doing business. While these add-on policies appear to be the simplest way to get travel insurance, they usually don’t include the comprehensive coverage you’d get with a travel insurance plan from a third party like InsureMyTrip. Financial default coverage, in particular, is one item that is frequently not covered by insurance policies you may purchase from a travel supplier.

https://www.insuremytrip.com/travel-insurance-plans-coverages/financial-default-coverage/

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12 hours ago, Redking said:

Thanks folks, points very well made. Decided  to hold off for now. We have a fcc with Celebrity which might be our safer option at the moment.

 

SMART!!  Glad that you wisely held off giving the cruise line too much of your caAsh that could be at risk.  Appreciate the great legal details and follow-up from rucrazy.  Clearly, all legal, insurance and financial protections are NOT all equal and clear.  Buyer beware!!!

 

From the Miami Herald in the heart of the cruise industry in South Florida late yesterday afternoon, they had this headline: Carnival Corp. CEO says company has enough cash to endure 12 more cruise-less months with these highlights: “Carnival Corporation has enough cash to survive a cruise-less 2021, CEO Arnold Donald told investors Monday.  The company reported a net loss of $2.2 billion during the final quarter of 2020 but ended the year with $9.5 billion in liquidity, enough to endure at least 12 more months without cruises, Donald said. To tighten supply, the company has divested of 15 ships from its pre-pandemic fleet of 105, and plans to bid farewell to four more in the coming weeks.  The company has returned 30 of its ships to U.S. waters since the U.S. Centers for Disease Control and Prevention lifted its months-long no-sail order in October.  Ships in U.S. waters are required to test crew members for COVID-19 weekly and report results to the CDC. Donald said the company is still awaiting guidelines from the public health agency about when and how it will operate test cruises, one of the next requirements.  While details regarding cruising’s resumption are still unknown, Donald said demand from past cruisers remains strong. Cumulative advanced bookings for the second half of 2021 are within the historical range, according to the company, and the cumulative advanced bookings for the first half of 2022 are ahead of 2019.”

 

It is good that Carnival and the other two major cruise lines have "cash", now.  BUT, how will this upcoming re-start work and how much "cash-flow" will be needed to fund and cover ALL of the costs during a slow, staged recovery?  Over what period of time will it require in order to get back to operating at a 50% level of sailing capacity?

 

Full story at:

https://www.miamiherald.com/news/business/tourism-cruises/article248421205.html

 

THANKS!  Enjoy!  Terry in Ohio

 

Sydney to NZ/Auckland Adventure, live/blog 2014 sampling/details with many exciting visuals and key highlights.  On page 23, post #571, see a complete index for all of the pictures, postings.  Now at 232,060 views.

www.boards.cruisecritic.com/showthread.php?t=1974139

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1 hour ago, TLCOhio said:

Clearly, all legal, insurance and financial protections are NOT all equal and clear.  Buyer beware!!!

Terry you are so correct! By all means all consumers need to do their due diligence when conducting any business transaction,  while I do agree holding off is the smart thing to do, there are options available for those who want to book, and have recourse of SS or another cruise line folds under the pressures of this pandemic.

 

Joseph 

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11 hours ago, TLCOhio said:

 

SMART!!  Glad that you wisely held off giving the cruise line too much of your caAsh that could be at risk.  Appreciate the great legal details and follow-up from rucrazy.  Clearly, all legal, insurance and financial protections are NOT all equal and clear.  Buyer beware!!!

 

From the Miami Herald in the heart of the cruise industry in South Florida late yesterday afternoon, they had this headline: Carnival Corp. CEO says company has enough cash to endure 12 more cruise-less months with these highlights: “Carnival Corporation has enough cash to survive a cruise-less 2021, CEO Arnold Donald told investors Monday.  The company reported a net loss of $2.2 billion during the final quarter of 2020 but ended the year with $9.5 billion in liquidity, enough to endure at least 12 more months without cruises, Donald said. To tighten supply, the company has divested of 15 ships from its pre-pandemic fleet of 105, and plans to bid farewell to four more in the coming weeks.  The company has returned 30 of its ships to U.S. waters since the U.S. Centers for Disease Control and Prevention lifted its months-long no-sail order in October.  Ships in U.S. waters are required to test crew members for COVID-19 weekly and report results to the CDC. Donald said the company is still awaiting guidelines from the public health agency about when and how it will operate test cruises, one of the next requirements.  While details regarding cruising’s resumption are still unknown, Donald said demand from past cruisers remains strong. Cumulative advanced bookings for the second half of 2021 are within the historical range, according to the company, and the cumulative advanced bookings for the first half of 2022 are ahead of 2019.”

 

It is good that Carnival and the other two major cruise lines have "cash", now.  BUT, how will this upcoming re-start work and how much "cash-flow" will be needed to fund and cover ALL of the costs during a slow, staged recovery?  Over what period of time will it require in order to get back to operating at a 50% level of sailing capacity?

 

Full story at:

https://www.miamiherald.com/news/business/tourism-cruises/article248421205.html

 

THANKS!  Enjoy!  Terry in Ohio

 

Sydney to NZ/Auckland Adventure, live/blog 2014 sampling/details with many exciting visuals and key highlights.  On page 23, post #571, see a complete index for all of the pictures, postings.  Now at 232,060 views.

www.boards.cruisecritic.com/showthread.php?t=1974139

Thanks Terry. Btw loved your Solstice/Australia and NZ review from some years ago.

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Hmm, am now a little more concerned. Last July I booked the Manaus to Miami cruise for March 2022.

Got a good price by paying in full and took advantage of the $1000 OBC,  was comforted by the fact that I can cancel for a 100% refund up to 121 days out.

 Have been tacking the prices and they have increased by about £800 over the last few months. I also see that vista and panorama suites are waitlist. So I'm reluctant to cancel now and dive back in nearer the time in the hope of securing a similar deal.

 I'm going to hang in there but the first rumor I hear and I'll be on the phone to cancel.:classic_unsure:

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Cruise companies have had plenty of time to plan for the future.

If they decide that a clean sheet is the best option, there will be no warning.

The whole point of liquidation in a planned way is to cut clean and fast, minimising share selling and

opportunities for the disaffected to act.

I have no idea what will happen , the vaccination fairy may wave a magic wand or…..

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On 1/11/2021 at 7:20 PM, cruiseej said:

, there was no unanimity of opinion on the topic. It

And if they go into bankruptcy then one would be considered and "unsecured creditor" and that puts one at the bottom of probably a very long list. I'd never pay in full that far out, much less to get only 10%. As said I'll stick with the stock market.

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It's not at all clear that any restructuring would void all the paid trips and FCCs the cruise line has in its 'bank.' Goodwill and a loyal customer base would be valuable assets for an acquiring or surviving entity. A 'clean slate' restructuring would also wipe out travel agent commissions, contracts with suppliers, contracts with crew, etc. Maybe everything would be wiped out… but maybe not. Lots of variables and no way to know how things might play out. (Hopefully, without any bankruptcies, reorganizations or liquidations!) 

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This will probably sound quite cavalier and feel free to criticize me, but given the state of the world right now, what is the worst thing that could happen if you pay in full and there is a bankruptcy...you lose your money and you do not get to take the cruise.  If you had taken the cruise, the money would be gone just the same.  Okay, you would have had the enjoyment of the cruise and happy memories.  I have gotten to the point in my life where I am too old to worry about some things.  Yes, it is a lot of money especially for us, but I am not going to waste energy and stress out over what might happen.  We paid in full for a lengthy 50 day+ cruise and just hope that we will be able to take it or a substitute at some time in the future.  As Bob would say, if we lose the money, we will not be happy but it won’t keep us from being able to buy that last box of Depends.

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I'm guessing I'm not quite as old as @Emtbsam -- not using Depends yet! 😉 -- but I agree with the sentiment. We've paid $50k for what will be our longest and most expensive cruise ever in Antarctica this December. (Not as long or expensive as many of you on this forum.) I will be decidedly unhappy if Silversea goes bankrupt and we lose our money. You'd probably see my posts on this site complaining. 😉  But in the end, we decided we could afford to spend this much on a cruise -- a year earlier. We would have traveled again -- somewhere -- in 2021, so by the end of 2021, we will have spent less than we would have pre-COVID. Of course, if Silversea were to go bankrupt, we'd have to come up with that much money again if we want to see Antarctica (which we desperately do). It wouldn't be easy to stomach. I dearly hope it won't happen. We're not gamblers, but in this case we're betting on being able to travel safely by the end of the year or to be able to cancel and get our money back by mid-year if signs point to that not being able to happen. 

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4 hours ago, Emtbsam said:

As Bob would say, if we lose the money, we will not be happy but it won’t keep us from being able to buy that last box of Depends.

Although we have never cruised together, I know several who have met the pleasure of your company.  So, for now, I continue to take solace in the many grins and chuckles you have brought me through your writing.  And finally, my hope still remains that one day we will enjoy sailing together on a Silversea voyage.

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