What Financial Protection Do ATOL Holidays Have?

Booking a holiday that offers ATOL protection, alongside buying a travel insurance policy suited to the trip, is a good way of offering a trip is financially protected should it not be able to go ahead.

ATOL (Air Travel Organizer’s License) is a UK financial protection scheme run by the UK Civil Aviation Authority (CAA) that protects most package holidays sold by travel companies. The scheme can also apply to some flights where tickets are not received immediately.

A package holiday can include flights and accommodation (including a cruise), or flights and a hire car, or flights, accommodation and a hire car. Two or more services must be booked and paid for through one provider – even if the services are carried out by multiple different companies.

The scheme works by ATOL license holders paying a fee of £2.50 for each traveler, which is then held by the Air Travel Trust in the case of an emergency. The collecting of funds held can then be used to refund, repatriate (bring travelers back home) or reimburse individuals if their package holiday is affected. It also means that if ATOL-protected company ceases trading, then consumers are financially protected and will receive their money back.

The purpose of the ATOL scheme is to reassure consumers that their money is safe and that protection is available in the event of travel business failure.

The Civil Aviation Authority has recently announced license that it granted 594 ATOLs following its initial March 31 deadline, with a further 31 licenses in the process of being renewed. 50 of the previous 675 ATOL license holders did not apply for their license to renew, which leaves only 1,618 ATOL license protection companies in total in the UK.

While 1,618 travel companies offering ATOL-protected holidays is still a huge number, it is always worth checking that a package holiday is ATOL protected just in case the company should cease trading before or during a trip.

The reason it is important to check, is because the financial failure of a travel company is often not something that travel insurance policies cover as standard. Therefore, should the policy not include this cover and the travel company go bust, and not have its own financial protection in place, consumers could be left out of pocket.

During the pandemic, became more aware of the protection included in their travel insurance and holiday bookings. However, there is a fear that now travel is almost back to normal, consumers may glance ‘non-covid’ related cover, such as financial failure, and find themselves short when it comes to making a claim.

Therefore, it is essential that anyone booking a holiday continues to check their travel companies’ terms and conditions and reads through their policy wordings before they commit to a policy or even trip.

As always, we’re here to help. So, if you have any insurance-related questions, please do feel free to send them over to us at hello@travelinsuranceexplained.co.uk and we will do our very best to help!

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