Golden rule number one: Get an ATOL-protected deal
The Civil Aviation Authority (CAA) runs a financial protection scheme for holidaymakers – the Air Travel Organisers’ Licensing scheme or ATOL.
When you buy your trip, if it’s sold as a package from an ATOL-protected tour operator then your money is guaranteed in the event that your holiday company goes under. A package is your flights plus at least one other element – for example, your flights and a hotel.
If you buy your holiday from an ATOL-protected tour operator then you won’t lose your cash if the company fails, and you won’t be stranded overseas and have to pay your own way home. The CAA will step in and either reimburse you or pay for the remainder of your trip.
When you’re browsing for your trip, check for the ATOL logo on the site or in the brochure. If you can’t see one then ask the holiday company for its ATOL number and check it on the CAA website before you book.
Be aware that hotel-only bookings made through tour operators are not ATOL-protected; you need to have purchased your flights as well for it to count as a package. If you have just booked a hotel stay, look to rules two and three for cover.
Over the last month, there’s been some news coverage of hotels refusing to accept the ATOL guarantee and demanding that holidaymakers pay again for their stay.
This shouldn’t happen and the CAA will usually issue a helpline number each time an operator goes bust, so that you can call if you’re having problems.
However, if you do have to pay again for your trip, the CAA will reimburse you.
Golden rule number two: Book with a credit card
As long as your travel or holiday costs more than £100 and less than £30,000, using a credit card to make your purchase gives you an extra layer of protection.
Under the Consumer Credit Act 1974, section 10, your card provider is jointly liable with the supplier if anything goes wrong. This means that if your holiday or flights don’t happen through no fault of your own, you should be able claim a refund from your credit card company.
This protection counts even if you just pay your deposit with a credit card and pay the remainder some other way, so it’s well worth doing this – even if you have to pay a fee for using a credit card.
You also get some protection if you pay with a Visa debit card, through the Visa Debit Chargeback scheme, where you can claim if the service you paid for doesn’t happen.
However, this isn’t part of the Consumer Credit Act, so it is not a legally binding requirement and a credit card is still a safer way to pay.
Golden rule number three: Buy comprehensive travel insurance
You want the best deal possible on your travel insurance but that doesn’t mean simply finding the cheapest deal – you need to be confident that it covers everything you need.
So, while you should look for the best price, you should also check the cover limits carefully to ensure you are properly protected.
If you want to be covered in the event that your holiday company or airline goes bust, you’ll need a travel policy that includes ‘supplier failure’ cover. Not all policies include this, especially cheaper ones, so make sure you examine the small print before you buy.
Over on travelsupermarket.com, you can see a list of insurers whose policies do include end supplier failure – but policies can change so make sure you check before you pay.
You can even buy standalone supplier failure policies if you’ve already bought annual cover that doesn’t include it.
Some flight delays and cancellations are also not covered by cheaper policies. Check your travel insurance includes ‘scheduled airline failure insurance’. If it isn’t included in the policy already, you can sometimes pay a little extra to add it on.