Help! Our Cruise Operator Went Bankrupt and We Are Out $17,905.

Dear Tripped Up,

In September 2022, I booked a 17-day Arabian Sea cruise through Vantage Travel Services to celebrate my 80th birthday with my wife. The cruise was to set sail in October 2023. I used my credit card to leave a $2,000 deposit and paid the remaining $17,905 shortly afterward by bank transfer. I also bought the Worldwide Trip Protector plan from Travel Insured International (for $1,954), in part because it covered financial default and bankruptcy of cruise lines. Vantage then canceled the cruise and offered me an alternative date I could not make; I also declined their offer of credit and asked for a refund, which they agreed to. But no refund ever came, and they stopped answering the phone. My credit card returned the $2,000, and I filed an insurance claim for $17,905. It was denied, as was my first appeal. Then Vantage filed for bankruptcy, and my second appeal was denied too. The reasons given by the insurer were outrageous. They cited a vague parenthetical phrase in the policy’s bankruptcy clause, claiming I wasn’t covered because I purchased the cruise directly from the cruise line (rather than, say, through a travel adviser). Then they said my policy lapsed when I canceled the trip. But I did not cancel; Vantage did. I also filed a complaint with the New York State Department of Financial Services, which was rejected. Can you help? Michael, Smithtown, N.Y.

Dear Michael,

When Boston-based Vantage filed for bankruptcy last year, it owed thousands of customers a total of $108 million for cruises and other travel products they had paid for but never received. The company’s former owner is facing lawsuits in New York and Pennsylvania.But you had purchased an insurance policy to cover just such a risk, a smart move. Or so you thought until the insurance company, Travel Insured International, denied your claim and then used exasperating logic to fend off your two appeals, first interpreting the policy’s financial default and bankruptcy clause in a maddening way and then twisting the meaning of the word “cancel.”

You made a few mistakes as well — most notably, by making a claim based on a financial default that had not yet happened. But after speaking with law professors, insurance experts and competing insurance companies, I believe Travel Insured International was wrong, at least by the time of your second appeal, and should pay up.

What does it have to say for itself? For nearly five months, Travel Insured International and its parent company, Crum & Forster, did not respond to my detailed inquiries. Days before publication, however, a spokeswoman, Amy Whilldin, sent the following statement:

“The claim was properly considered, and the correct determination was made based on the facts of this claim, which was to the satisfaction of both the New York Department of Financial Services and the New York State attorney general.”

Ms. Whilldin is correct about the state’s financial services department. An examiner with the department, which regulates the insurance industry, rejected your complaint. “After a review of the policy language,” he wrote, “we do not find they are acting in an arbitrary or capricious manner,” referring to Travel Insured International. I disagree with that determination, as we are about to get into.

But the attorney general’s office was not satisfied. You had complained to its Department of Consumer Frauds and Protection, and they did not receive a response from the company. “Despite our repeated efforts,” an employee wrote, “they have failed to respond.” The letter goes on to recommend you consider suing the company.