Insure against company going bust?

thirtytwentyten

Is it possible to insure yourself against a company going bust? Specifically, I am starting a pilot training course at a flying school in the spring and they require full payment up front - in excess of £50000. This is non-negotiable. The course lasts for approximately 12 months.

Is there any form of insurance available that will allow me to recover my costs should the flying school go bust during this time? I am aware of the section 75 protection when paying on credit card but unfortunately my credit limit is not £50000 so the payment will be made by debit card...

Any help/advice gratefully appreciated!

dacouch

There are bonds / credit guarantees that can be taken out by the supplier or purchaser to protect them, however these are designed for businesses to protect themselves. In theory you could get cover but the premium is likely to be prohibitive eg upwards of £750.

Have you looked at section 75 cover from a credit or finance agreement as this may cover what you want (There is a section on the MSE website explaining it)

*MF*

Hi ...

My suggestion re your question - Put any fees in joint names at a Bank (Yours and the Flying Club) and let them draw these down as the course proceeds, with you both as joint signatories on the account - it offers some protection for both you and the Club.

But were it me, I would avoid like the plague any company who insists on full payment up front:

Why? well, for starters:

http://www.inverness-courier.co.uk/news/fullstory.php/aid/9191/Troubled_flying_school_owes__A3174,000.html

There seem to be quite a few flying clubs about, are you sure they all, every single one, ask for fees up front like this, see here:

http://www.pilotweb.aero/assets/ClubsandSchools.pdf

Main suggestion - there are specialist magazines (like that above) and I am sure there must be forums for flying enthusiasts - maybe seek these out - I think you will find more and perhaps better answers there - based on the experience of other flying enthusiasts.

thirtytwentyten

Unfortunately that is not an option... The entire course has to be paid for in full in advance - it is non negotiable. I'm just wondering a bit more about section 75 protection. The guide states that only a deposit has to be paid on the card to receive the protection but that the cover is limited to £30000. So if I pay, for example, a £5000 deposit on the card and pay the remaing £45000 or so by other means - would I be covered up to £30000 or not covered at all as the transaction is over £30000?

dacouch

Try asking about the Section 75 cover on either the Banking or Loan threads on the MSE forum as there will be people on there who will have better knowledge of section 75 cover

thirtytwentyten

Looks like the section 75 cover is not provided at all on purchases over £30000 so still looking for advice on any type of insurance that may be available??

thirtytwentyten

Just giving this topic a quick bump in the hope of some help....

dogbot

Are you particulalry worried about the company going bust? I understand that it is your savings etc, but if you are that worried should you be using them at all?

If you had section 75 cover then that covers you for 30k, surely you only loose 50k if they go bust at the start of the course, but if you build up your hours and modules over time then should the go bust part way though you could start up mid way though with another place? Just a thought.

Otherwise you are probably stuck with the bond's option that DA pointed out at the start.

thirtytwentyten

No particular reason for them to go bust - but I had my entire savings with Icesave so I think I'm a little more cautious in that respect now! I've looked into section 75 and the cover isn't provided for purchases over £30000 - so thats not an option unfortunately.

You are correct about modules and hours being built up over time, however the costs are heavily weighted towards the end of the course as the flying becomes more expensive - so much so that the first 6 months consists of groundschool with a liability of approx £5000 - the final 6 months is the remaining £45000! So there is a fair element of risk....

dogbot

Fair enough, interesting about section 75.

Certainly understand the caution - I am quite surprised they make you pay up-front!

Good luck with your training.

dacouch

As I mentioned before their are companies who will insure you against the supplier going bust. The problems though would be it is fairly complex as their staff will have to run credit checks on the company and then indivually assess the risk and thus the premium to charge. As it is fairly labout intensive you tend to find the premiums start at £500 but can be very much higher depending on how credit worthy the company is / the sector they work in.

If you are happy paying say £1000 to cover the risk let us know and we can post some links for you