How you can protect your money when travel companies go out of business
The collapse of Lowcostholidays has thrown travel plans for 110,000 holidaymakers into chaos – many with no idea whether they can get their money back.
So, how are any of these people protected, if at all? And how can YOU be sure your cash would be secure if the same thing happens to a company you book a holiday through?
Here’s the answer -
Always check a company is ATOL registered
Lowcostholidayswas based in Spain and so was NOT registered with ATOL, the Air Travel Organisers’ Licence.
Never book a holiday package with a company that is not ATOL protected.
ATOL protects you from losing your money or being stranded abroad if a firm goes bust while you’re away.
UK-based travel companies selling air holiday packages must have an ATOL registration and must issue a certificate to you to prove it.
You can also check on the ATOL website, here, that a company is genuinely registered.
ATOL is funded by travel companies, which are required to pay £2.50 per traveller into a central ATOL fund.
This money is used to let holidaymakers complete their holidays or issue refunds if a company collapses. When you book your holiday, you may be charged this extra £2.50.
Lowcostholidays offered trips to destinations such as Spain's Benidorm
What about ABTA?
ATOL protection covers flight-based holidays.
If you buy a land or sea-based holiday (such as one involving a coach, trains or a cruise) then you should check you’re buying from an operator registered with ABTA (the Association of British Travel Agents).
If the company is an ABTA member your money will be protected by the organisation’s financial protection scheme. That means if the company fails you will be entitled to a refund before you travel.
If you’re already on holiday, your hotel and return flights will be taken care of.
ABTA members also agree to adhere to certain standards and have a code of conduct, which you can use to complain if you believe you have been treated unfairly.
Similar, but less well known schemes are offered by the Global Travel Group and the Travel Trade Association.
Always check the agent you’re using is a member of one of these schemes by contacting the organisation. And ensure you know exactly what is covered.
If you’re making your own holiday arrangements, as millions now do thanks to the internet, you’re going to need travel insurance.
But not just any travel insurance.
It is always unwise to assume your policy will cover you for specifics. It’s always better to check.
For example, many people assume they will be covered if a travel firm goes out of business, but many policies exclude this.
In fact, the majority of insurers do not cover you for the financial failure of a travel agent, airline or tour operator.
And, even if they do, cover might be very limited.
You’ll see similar exclusions for events like terrorist attacks and natural disasters.
However, a good many insurance providers will now offer more comprehensive protection that covers natural disasters, man-made ones and a company going under.
Search for the all-important clause – End Supplier Failure and Scheduled Airline Failure Insurance (SAFI).
Top Tip: We suggest looking at a policy’s small print online and doing a search for SAFI.
SAFI will cover your costs if an airline or an agent goes bust. And this might also be available as an optional extra on a regular travel insurance policy.
Be aware, too, though, that some insurers will exclude certain airlines, so, again, check the small print before you buy if you want total piece of mind.
Cover will usually allow you to claim the cost of buying flights to get home as well as your accommodation, if the supplier of that goes out of business.
You might also want to seek out a policy that covers you for all the extras you could face – car hire, taxis, trains, ferries and so on.
If your current travel insurance policy doesn’t offer SAFI, you may be able to buy it as a stand-alone addition.
Shopping on credit card can give you extra protection
Credit card protection
You should always pay by credit card to ensure you have an additional layer of protection against a company going bust before you travel.
But we don’t recommend relying on this as cover.
If anything you pay for is more than £100 per head then the Consumer Credit Act says the credit card company is jointly liable and you should get your money back. Some debit card providers also provide a Chargeback service that allows you to claim money back.
Check with your provider.
But in all cases, always keep every receipt.
If you need help with your travel complaint, publicise your case on A Spokesman Said.