Air Australia collapse and Travel Insurance

Air Australia (formerly Strategic Airlines) hadn't been in business as a passenger airline for long before it was placed in administration, although it was a charter and freight airline for over 20 years.
Air Australia positioned itself as a low cost carrier (LCC) and was directly competing with the likes of Jetstar and Tiger Airways. It offered low fares to domestic and international destinations, notably Hawaii, Thailand, and Bali. When they were placed into administration many passengers were stranded overseas or left holding worthless tickets. More information can be found on Wikipedia: http://en.wikipedia.org/wiki/Air_Australia
What will Travel Insurance cover?
First place you need to check is the PDS. This spells out the terms and conditions of your travel insurance policy. Then go to the travel insurance company's website and check for any updates (or call them). If there are exceptions in place or your policy doesn't provide coverage you won't get any help from your insurance company.
Otherwise you will be covered for (up to the policy limits):

• Cost of re-booking flights
• Hotel accommodation
• Food and other incidentals

Ensure that you keep all receipts and check with the insurer the quality they will cover. They will generally only match your existing or previous level, eg if you booked economy seats you will only be covered for the cost of economy flights. Accommodation is usually at a 3 star level.
Remember that you will need to pay an excess for claiming. If you have future flights booked it might be best if you do a charge back via your credit card (if you paid with one) as this won't be reduced by an excess.

Need help finding the right travel insurance? Take a look at Allianz Travel Insurance Reviews and Travel Insurance Direct Reviews.