It’s every holidaymakers’ worst nightmare – the holiday you’ve been looking forward to for months is just days away and the company you booked with suddenly goes bust.
Not only might this leave you scrabbling to make other last minute plans for your holidays, but it could also leave you seriously out of pocket, especially if you’ve booked the various elements of your break separately rather than as part of a package.
Here, we explain what your rights are if your holiday company goes bust, and whether you’re likely to be able to claim on your travel insurance.
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The travel company I’ve booked with has gone into administration, can I claim against them?
Most holidays abroad where you travel to the destination by air, and use a UK-based travel company are covered by the Air Travel Organisers’ Licensing (ATOL) scheme. The ATOL scheme has a fund which can be used to make sure holidaymakers can complete their holiday or, if they’ve not yet left, get their money back.
If you’re already on holiday when your travel company goes bust, your flight home has been paid for and should be taken as normal, although some people may experience problems. However, other services, such as hotel and car hire may ask for payment directly from you. You should keep any invoices and receipts to show what you’ve paid.
How do I know if my travel company is covered by the ATOL scheme?
You should be told whether or not the company you’re booking with is covered by the ATOL scheme before you book. You can normally find this information on the holiday company’s website, in its brochures or in its high street stores.
You must be given an ATOL certificate as soon as you pay any money towards a holiday where the company is covered by the ATOL scheme. A. In general terms, if the company is based outside the UK (even if it has a website ending in .co.uk), its holidays will not be covered by the ATOL scheme.
Do I have any protection if I booked through a travel agent?
If the travel agent is an ABTA (Association of British Travel Agents) member, you will be protected if you book a package holiday that’s not covered by the ATOL scheme. Many ABTA members also sell additional insurance for flights or hotels that may not be covered by either ATOL or ABTA.
Find out more about how ABTA and ATOL protections work in our article How are holidays protected?
What can I do if I don’t qualify for a refund or if I can’t get my money back?
Your other option is to claim against your travel insurance or, if you paid the deposit or for the holiday by credit card, against your credit card provider, citing Section 75 of the Consumer Credit Act.
Your travel insurance may pay out if your travel company goes bust, but even if it does, you will be expected to try and claim from any scheme that offers protection (such as ABTA or ATOL) first.
If you’re the kind of person who prefers to book your hotel independently, look out for ‘end supplier failure’ or ‘supplier failure protection’ in your policy small print. This is specifically designed to pay out if your hotel or scheduled airline goes bust.
Some travel insurance policies include ‘scheduled airline failure’ cover, which specifically protects you in the event of a scheduled airline going bust. However, it won’t pay out if your hotel runs into financial difficulties and has to close.
If, when buying cover, you find your travel insurance doesn’t include end supplier failure or scheduled airline failure cover, you may be able to buy this as a separate add-on.
If my travel insurance doesn’t cover me, will my credit card provider pay out?
If you paid for your holiday using a credit card, then under Section 75 of the Consumer Credit Act, if the supplier you paid failed to deliver the holiday/flight then in theory you should be able to get a refund from your card provider.
However, the situation becomes more complicated if you bought your holiday via a website portal for your holiday and they have already passed payment onto the airline, hotel, car hire company on your behalf. Whether or not you could make a claim under Section 75 would come down to who you paid and who your contract was with.
You can find out more about credit card protections in our article Section 75: Credit card protections explained.
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