Throughout the last 25 years of cruise industry growth, passengers sailing on ships serving U.S. ports have been protected by a performance bond administered by the Federal Maritime Commission (FMC). The bond covers passenger refunds for "non-performance of transportation." Since the program was instituted in the early 1960s, the bond level has sufficiently covered most all qualified passengers seeking protection.
The Commission’s current bonding program requires vessel operators to post a maximum $15 million performance bond with the FMC. In the event a cruise line fails financially, this bond is used to reimburse those passengers embarking from U.S. ports.
In June 1997, the FMC issued a Notice of Proposed Rulemaking (NPRM) on the passenger bonding program to ensure that adequate levels of protection continue. The proposed FMC rule recommends removal of the $15 million ceiling and adoption of a modified sliding scale of coverage based on an operator’s unearned passenger revenue. The cruise industry supports continued passenger protections in this area and has offered comments on the FMC’s proposed rule.
Travelers purchasing a cruise also can protect themselves by paying with a major credit card, and/or obtaining low-cost travelers’ insurance that covers trip cancellation for any reason, including supplier default. The latter is available through many travel agencies as well as through various insurance companies.
Technical & Regulatory
Financial Responsibility
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