Do airlines pay back the full value of lost luggage?
Should you have your baggage misplaced, the airline may compensate you for the lost, damaged or delayed luggage – even if it’s eventually returned to you. However, you may not be completely compensated for the value of all lost belongings.
According to the Montreal Convention of 1999, international flights are only required to compensate passengers up to 1,288 Special Drawing Rights (SDR) units, which as of 4 January 2023 is US$1,700 (AU$2,489).1 An airline may choose to pay more than this limit but they are not required to do so.
Compare the Market’s General Manager of General Insurance, Adrian Taylor, saw airline liability conventions highlight the importance of travel insurance for your luggage.
“Even if you do get your lost or delayed baggage delivered to you at your holiday destination, it could be days without your gear, forcing you to fork out extra for vital travel essentials,” Taylor explains. “While the airline might pay a claim, you might not be compensated for the full value of your belongings.”
“Getting travel insurance can help because you could get a policy for your luggage that covers you against loss and theft, including cash and travel documents. It has higher coverage limits than the limits required on airlines by international conventions, so you can have greater peace of mind if you need to make a claim.”
How often are people compensated by airlines for lost luggage?
In the event where people lost luggage, more Canadians reported being reimbursed by the airline (37% of those surveyed) than Australians and Americans. Only 25.2% of Australians reported being reimbursed, followed by 23.4% of Americans.^
Canadians also had to wait the least amount of time before receiving compensation from the airline. On average, they had to wait 18 days, while Americans had a 21-day average wait. Australian respondents had the longest wait for reimbursement, at 28 days. Likewise, Canadians also received the biggest compensation, getting US$734 on average, while Australians typically received a mere $512.
Does travel insurance pay more than an airline for lost luggage?
According to our survey results, when respondents made a claim with their travel insurer, they received a bigger payout in a faster time than with the airline – except for Canada, where the average payout amount was less than what airlines paid.
The biggest difference was in the USA. Americans compensated by their travel insurance received US$1,031 on average, US$363 more than what the average airline payout was. Americans also went from an average 21-day wait for airline compensation to 15 days with a travel insurer. Canada went down from 18 to 11 days, while Australia had a marginal difference, with travel insurers being just two days faster.
However, as Taylor points out, some of those respondents received a payout from the airline and from their travel insurer.
“It is possible to receive compensation from your airline and your travel insurer. Your insurer will ask you to make a claim with the airline (if you haven’t already) and ask how much they compensated you. Your insurer will then pay you the difference between the reimbursement from your airline and the value of your things,” says Taylor.
“This further highlights the importance of having travel cover, as it can help provide extra coverage and a better overall monetary payout so you can continue your travel and make your way home with replaced clothing and travel gear.”
|Compensation waits and payouts||Australia||Canada||USA|
|Average wait for compensation from airline (number of days)||28||18||21|
|Average compensation amount from airline (USD)||$512||$734||$668|
|Average wait for compensation from travel insurer (number of days)||26||11||15|
|Average compensation amount from travel insurer (USD)||$569*||$560*||$1,031*|
|Note: Survey respondents answered in their local currency. Prices were converted into USD on 23/01/23 using Google’s currency converter tool.|
* Some survey respondents were compensated by both their airline and their travel insurer.
Is it common to lose items or have them stolen when travelling?
Theft and pickpocketing can occur when travelling, and some parts of the world are more infamous for it than others. Fortunately, the majority of travellers surveyed have not lost an item or had it stolen once they had reached their destination (excluding any mishaps with the airline). Almost 72% of Australians had never had anything stolen or lost, compared to 63.5% of Canadians and 59.9% of Americans.
Americans were more likely to have several types of items disappear or be misplaced compared to Australians and Canadians. The most common lost or stolen item for US travellers were electronic devices, while the most common things Canadians and Australians had lost or stolen on holiday was clothing.