Archive for the ‘Travel protection’ Category

I did a couple of posts on my cruise blog about the collapse of All Leisure Group, which took with it two cruise lines, Swan Hellenic and Voyages of Discovery. As part of the general discussion around what happened I read a post from an Australian passenger who had not only lost their planned holiday but also their money – they reported that their travel insurance didn’t cover the bankruptcy or or failure of their travel provider.

My first response on reading this was to wonder “who takes out travel insurance that doesn’t cover this risk?”, but then I realised that I wasn’t actually sure whether mine did or not. So I checked, and discovered that it didn’t. Furthermore I now understand that this is usual – that liquidation or bankruptcy of a holiday provider, e.g. an airline, travel company, hotel, etc, would not normally be covered by travel insurance. So how do customers protect themselves, I asked, and the answer was “through ABTA or ATOL, or your credit card”. I’ve done some research into the protection provided by these measures, and here are my layman’s findings. (Note this is not intended as ‘Advice’; it’s just a record of what I think the position is. Readers interested in this topic should satisfy themselves.)

The main routes by which UK customers can protect their payments seem to be four-fold: ABTA; Atol; “Section 75”; and specific insolvency insurance (yes, in fact it does exist). I’ll take these one at a time.

1. ABTA: ABTA of course stands for “(The) Association of British Travel Agents”, and what I’m talking about here is the ABTA scheme of financial protection. Here’s a quote from their website:

If you buy a land or sea-based package holiday (such as coach, rail or cruise) from an ABTA Member your monies will be protected by the ABTA scheme of financial protection. This means that if your travel company fails and your holiday can no longer go ahead you will be entitled to a refund if you are yet to travel and hotel costs and transport home if you are abroad.

There are a few things to note in that paragraph: First, the protection scheme only applies to land or sea-based holidays; i.e. a land holiday in the UK, or a cruise that starts and concludes at a UK port. Anything involving air travel is excluded, although it may be covered by the Atol scheme (see below). Secondly, the scheme applies to ‘packages’ only. Please see this page on the gov.uk website for the definition of “a package”, but simply put a package will consist of more than one component booked at the same time through the same provider.  Thirdly, it only applies to holidays booked through an ABTA travel agent, so anything you book directly with a provider is not protected. In fact even a ‘single component’ holiday – a hotel stay, for example – may not automatically be covered by the ABTA scheme even if you book it through an ABTA travel agent because it wouldn’t be a package. Just to complicate matters, the travel agent may have additional protection that would cover that case, so it’s a good idea to check what your TA provides.

2. Atol: this stands for “Air Travel Organiser’s Licence”, and it’s a Government-run scheme operated by the Civil Aviation Authority (CAA). It requires any air travel operator to protect a customer’s payments for their package holiday that includes flights and accommodation. The customer will receive an Atol Certificate at the time of booking, and they should keep this – they’ll need it if they need to make a claim under this scheme. (If you don’t receive an Atol certificate when you book then that’s a good indication that your booking is not Atol-protected – see below.)

There are plenty of situations where the Atol scheme will not apply, even for a holiday that includes air travel. The biggest of these is any scheduled flight booked direct with the airline (or, I think, through an air flight booking agent e.g. Opodo). Next is any separate hotel booking made direct (or through an intermediary that’s only selling the accommodation, e.g. booking.com) – again, not covered. Thirdly, even if your holiday is Atol-protected, it only provides financial protection in the event of a travel provider bankruptcy – it does not offer assistance in the event of other problems on your holiday e.g. illness or injury. Finally, although some airlines sell complete holidays that include flights and accommodation, it may not be covered by the Atol scheme. The customer should check with the airline before booking.

3. “Section 75” protection. This refers to Section 75 of the Consumer Credit Act 1974, and here’s the current (Jan 2017) text of Section 75 sub-section1:

If the debtor under a debtor-creditor-supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor.

 What this means is that if the customer (the ‘debtor’ above) pays for a good or a service with a credit card, and the supplier of that good or service fails to provide it (i.e. there is a breach of contract between the supplier and customer), then the credit card company (the ‘creditor’ above) is as liable to the debtor as is the supplier. Basically, you can recover your costs from the credit card company.

There are some caveats. First, the amount of money involved has be at least £100 and no more than £30,000. Secondly, this protection only applies to credit card payments; payments by cash, cheque, or debit card are not covered. (However payments by debit cards, charge cards, and payment cards may be covered by ‘chargeback’ schemes. Ultimately these schemes seem to be backed by the major card suppliers, i.e. Visa, MasterCard and American Express, but are operated by the card issuer – typically, a bank – and you should approach them for advice.)

4. Insurance specifically aimed at protecting customers from travel providers’ insolvency. There is at least  one company offering this – protectmyholiday.com . I can’t find any reviews of them, although I have found links to them from various advisory sites so it looks as if their reputation is good. But readers must determine their own opinion.

Looking at their website, they state that their policy covers:

….the insolvency before or after departure of any travel arrangements booked in the United Kingdom, Channel Islands, Isle of Man and the Republic of Ireland, not forming part of an inclusive holiday and not bonded or insured elsewhere

Note the “..not forming part of an inclusive holiday and not insured elsewhere” section at the end. From that I take it that any holiday that would be covered under ABTA or Atol would be excluded from the coverage of this policy, even if you took it out!


So that’s the position as far as I can understand it. Please note once again that nothing in this post should be taken as “advice”; it’s for information only, and comes with a big health warning which is that it’s simply an expression of my understanding of the situation. You should always do your own research.

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