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Are you covered if your travel company goes bust?

Are you covered if your travel company goes bust?


Many package holiday companies and travel agents are struggling as consumers increasingly book holidays directly via the internet and cheap flight providers, hitting profits and making the collapse of companies such as Thomas Cook ever more likely.

But if you had booked a holiday through a travel firm like Thomas Cook, what would your rights be, and would you be able to get any money back if it went bust?



Package holiday compensation rights

Anyone who books a package holiday involving flights should be covered by ATOL, which stands for the Air Travel Organiser’s Licence and is operated by the Civil Aviation Authority (CAA). However, your travel provider has to be a  ATOL member.

The other organisation that provides cover for package holidays is ABTA.



What’s the difference between ATOL and ABTA?

The ATOL scheme is there to protect consumers booking flight-based holidays, while ABTA provides cover for cruise, self-drive and rail-based holidays.



Checking for ATOL scheme membership

The company you booked your holiday through must be a member of ATOL if you’re to get compensation, so always check before you pay. 

The travel firm should provide you with an ATOL certificate when booking. But in case the number isn’t genuine, which has been known to happen, look for a number that should be displayed next to or under the ATOL logo on paperwork and emails on the CAA’s website. 

You can then check if it’s legitimate on the CAA’s website, or give them a call.



How can you get home if you’re already abroad?

If you’re already abroad when the firm ceases trading, you should be able to book an alternative flight via the CAA. 

In the case of Thomas Cook, the CAA, in conjunction with the Government, organised the largest peacetime repatriation ever to get holidaymakers back to the UK.



What about if you must stay abroad longer than planned?

If you incur extra hotel and accommodation costs, the CAA should pay for this as well.



What if you’ve booked flights separately?

You won’t be able to get compensation for your flights if you’ve booked them directly through a flight provider such as RyanAir or Easyjet.

In this case, and you were stuck abroad, you’d have to book and pay for flights home yourself.



What does ABTA cover your for?

ABTA – previously known as the Association of British Travel Agents – should cover your hotel and accommodation costs, as well as associated rail, cruise or self-drive costs, if the holiday company you booked through isn’t ATOL-protected.



If you’re still in the UK

If you haven’t travelled yet when you find out the holiday firm has gone bust, you should receive a full refund, again if the firm your holiday is with is ATOL/CAA, or ABTA, protected. 

You would need to contact the CAA, or ABTA, to start the claims process.



Would travel insurance cover me anyway? 

It’s easy to assume that none of this matters if you have separate travel insurance anyway. However, it’s an assumption that could cost you dearly.

According to financial consumer watchdog Defaqto, only 48% of travel policies provide cover for ‘financial failure’ and ‘scheduled airline failure’. So, check with whichever provider you decide to take out cover with before you buy it.

Also look out for the terms ‘Scheduled Airline Failure’ (SAFI) and ‘End Supplier Failure’, which refer to flight companies and hotel and accommodation providers going bust and see if they’re included in a policy.

Additionally, be careful with the period of any holiday you book that a policy covers you for. Make sure cover is triggered not just for once you’ve arrived somewhere but also the day you leave and the day you land, especially if you’re flying overnight.



Does credit card payment provide protection?

If you book a holiday using a credit card, you should be able to claim compensation under Section 75 of the Consumer Credit Act. The sum being claimed for must be for no more than £30,000 and you need to contact your card company to start the process.



Making a claim 

Make sure you keep as much proof of holiday costs as possible, such as receipts for payments and deposits and emails, they’ll come in handy if you have to make a claim.

Get in touch with ATOL/CAA or ABTA, or your travel insurance provider, as soon as you can after things have gone wrong.




Policy Expert

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Published 31st October 2019