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You may want to protect your holiday from your airline or accommodation going bust, but how? Insuring against insolvency/financial failure is no straightforward task. If you're trying to figure out if you're already protected by ATOL or ABTA, or if you need to buy separate travel insurance with SAFI or ESF cover, we've tried to explain the basics here in plain English.
ATOL or ABTA: Protection for Package Holidays
If you booked a package holiday with flights and accommodation together (that is, you paid one price for the total trip), you should have cover if your travel firm holds an ATOL (Air Travel Organisers Licensing) and you've received confirmation that you are protected with an ATOL certificate. In that case, the travel firm is responsible for your flight arrangements and must either make alternative flights for you so that your holiday can continue or provide a full refund. If you are already abroad, the travel agent should make plans to allow you to continue with your holiday and then bring you back to the UK at the end of your trip.
ATOL does not protect you if you book direct with an airline. If your ATOL travel firm books your flights and accommodation separately, then only your flights would be protected by ATOL. In that case (i.e., flights and accommodation booked separately), you may still be protected if your travel agent runs their own financial protection scheme through the Association of British Travel Agents (ABTA).
When you book a package holiday, it's always a good idea to ask if your booking is covered under ATOL or ABTA. But beware that some firms falsely advertise that ATOL Protection is in place. As of January 2018, the Civil Aviation Authority list of firms falsely indicating that an ATOL is held included the following websites, which should be avoided if you're planning a holiday:
Protection When You Book Your Own Holiday
If you're not covered by ATOL or ABTA because you made your own arrangements, you may assume that you're still covered through a travel insurance policy. However, many travel insurance plans will NOT cover you if your airline or hotel goes bust. If having this insolvency protection is a priority for you, look for plans that include Scheduled Airline Failure (SAFI) and/or End Supplier Failure (ESF).
It's always worth reading the fine print of a plan's terms and conditions yourself to fully understand the scope of cover before you purchase travel insurance. And some plans will only pay out if you can't be reimbursed another way (e.g., from the airline or your credit card).
Scheduled Airline Failure (SAFI) should cover your costs if an airline or agent goes into administration. Some travel insurance plans include SAFI cover as standard—but you may have to pay extra for it or only find it on a provider's more premium plans.
SAFI protection may vary significantly depending on the policy. Some travel insurance plans simply cover the cost of the original tickets purchased or any unused portion, while others may cover the additional cost of purchasing new flights (e.g., new tickets for travel back to the UK).
Depending on the policy, with SAFI you should be covered for either:
- Your original ticket cost paid prior to departure
- The cost of a return flight to the UK or onward flight(s) in order to complete the pre-arranged journey at the same standard as originally booked
If you've booked your flights, accommodation and other services (e.g., car hire) separately and you're not covered by ATOL, the most comprehensive alternative cover is generally End Supplier Failure (ESF). ESF cover will vary by insurance policy, but should allow you to claim back the cost of purchasing alternative flights should your airline go bust. You may also be able to claim back the cost of alternative accommodation if any problems arise with the hotel rooms you have booked; cover may even extend to include ferry, coach and railway tickets, car hire and villas/cottage—the extent of your cover will depend on the small print in your policy's terms and conditions. ESF may also be referred to as Financial Failure or Insolvency cover.
Credit Card Protection
If you paid directly to the airline by credit card you might be protected by Section 75 of the Consumer Credit Act 1974. Paying by debit card is more risky—you may have similar cover if your debit card is a Visa, but check the conditions on your card before relying on this protection.
End Supplier Failure (ESF) can cover your costs if a travel provider fails financially and can no longer deliver the transportation or accommodation you've bought from them. ESF (also called Financial Failure or Insolvency cover) can cover the purchase of alternative flights should your airline go bankrupt and/or alternative accommodation if a hotel you've booked becomes insolvent. ESF can also cover ferry, coach and railway tickets, car hire and villas or cottages, but the extent of cover depends on the small print in your policy's terms and conditions.
End Supplier Failure (ESF) travel insurance is a definite nice-to-have feature. If you would be devastated by an accommodation or transport provider becoming insolvent and subsequently losing any money you've paid them, then ESF is cover you should look for in a policy.
Scheduled Airline Failure Insurance (SAFI) covers costs if an airline or agent goes into administration—coverage can vary with some plans simply covering the cost of the original tickets purchased or any unused portion, while other plans may cover the additional cost of purchasing new flights (e.g., new tickets for travel back to the UK). SAFI cover may be included as standard with your travel insurance, although this is somewhat rare and typically only offered on more premium plans. Other times you can buy it as an optional add on feature, but not always.