Package holidays booked in the UK have been protected through the ATOL (Air Travel Organisers’ Licensing) scheme for decades, meaning it was implemented at a time when we all booked our holiday from the brochures on the shelves of the nearest travel agent. As internet usage grew, so did the number of holidaymakers packaging their own holidays, or using online travel agents who often sold holidays in such a way that ATOL protection was avoided.

How did the old rules work?
Prior to April 2012, any holiday (which included air travel) that was sold as a package had to be protected through the ATOL scheme. This essentially meant that the operator selling the holiday had to obtain an ATOL licence from the Civil Aviation Authority (CAA) and pay £2.50 per passenger into the Air Travel Trust Fund. If the tour operator ceases trading, this fund is used to refund those customers who had already paid for their holiday, and repatriate those already overseas.
However, this made it relatively easy for internet based travel companies to avoid the red tape and expense of an ATOL licence by selling holidays in a de-packaged way by offering the components separately and acting as an agent rather than the operator. The government has therefore stepped in to change the rules because the majority of British citizens overseas were not protected and following the collapse of large holiday providers such as the XL group in 2008, the fund was running at a deficit of well over £40million.
What has changed?
The most important of the new rules have been implemented in two parts. In April this year the de-packaging loophole was closed and holiday components sold to the same customer must be protected through the ATOL scheme. Holidays sold in this way are known as ‘Flight Plus’ holidays, but the protection is identical to the more traditional package holiday. Then from October 1, 2012, all ATOL protected holidays must have an ATOL Certificate issued to the traveller providing them with proof that they are covered by the scheme.
What has not changed?
Airlines are still exempt from the ATOL scheme, so any flights or holidays booked through an airline will not be ATOL protected. This is because to bring airlines into the scheme requires time-consuming primary legislation and it does not appear to be a government priority.
What it covers
ATOL is not an insurance policy. The legislation only provides protection for customers who are affected when the licensed operator or agent that they have booked through cannot fulfil the holiday due to financial failure. If a customer is overseas when a company collapses, the ATOL fund is there to ensure that they can complete their holiday. If they have not yet left and can not get away they would receive a full refund.
Taking out travel insurance
Separate travel insurance is strongly recommended for any overseas trip. It does not cover tour operator failure, hence the need for ATOL protection, but it does cover costs arising from things like cancellation, delay, loss, theft and personal injury.Travel insurance is included by some employers, selected premium bank accounts and other financial products, but the vast majority of us have to arrange our own cover.

Policies that cover you for your holiday can be taken out for a specific destination for a specific length of time, which usually works out to be the cheapest option if you only take one or two overseas trips a year. An annual multi-trip policy can save you money if you are going overseas more than once. There are also savings to be had if you buy it as a couple or family.
The policies cover things like medical care, lost or stolen baggage and personal belongings, and delays in travel that curtail your trip, but levels of cover vary. If you carry a lot of valuable items such as jewellery, electronic gadgets and expensive clothing you need to make sure that you have adequate cover, while cost can also be affected by age and pre-existing medical conditions.

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