Flight Delay Insurance

Maybe I travel too much, but why don’t airlines sell flight delay insurance? This can help them gain additional revenues AND even increase their incentive to be on time.

A traveler chooses an amount of coverage, $x, he wants to be compensated if his flight is more than 1 hour late or if he misses a connection. The traveler pays some % of $x for this insurance.

If the flight is delayed, the traveler is less pissed because at least he receives a large cash payment.

If the flight is on time, he loses a small amount of money.

You could also do different levels of coverage. Late 1-2 hours would pay much less than being late more than 4 hours, or having to stay overnight.

Example:

I want to be paid $200 if the flight is 1 – 6 hours late and $2,000 if the flight is more than 6 hours late. Assuming flights are on time within an hour 95% of the time, and within 6 hours 99% of the time, the pure premium should be: 5% of $200 + 1% of $1800 ($200 of the $2000 have already been counted, as you would receive a total of $2000, not $2200l) = $28. Willing to pay $30 for the possibility of $2,000 if you have a nightmare of a flight? I bet lots of business travelers are.

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