27th March 2025
10 min read
by Anna Jones
Booking a holiday is exciting, but what happens if your travel provider goes out of business? That’s where ABTA and ATOL come in. In short, ABTA and ATOL are protections that will mean you’re not left out of pocket if something goes wrong with your trip.
This guide will break down what ABTA and ATOL cover, how they work and why they are important.
What Does ABTA Stand For?
ABTA stands for the Association of British Travel Agents. As the UK’s largest travel trade association, ABTA has been supporting travel businesses and consumers for the last 70 years. It helps its members run simultaneously compliant and successful travel businesses as well as providing travellers with advice, guidance and financial protection
How Does ABTA Work?
ABTA is a British organisation protecting travellers and holidaymakers if a travel company fails to fulfil its obligations or goes out of business. If something goes wrong, ABTA protection will mean customers receive financial compensation or alternative travel arrangements.
ABTA safeguards all UK holiday bookings that do not include flights. This means that rail, cruise and driving holidays booked with ABTA members are covered. However, if you book your flights to reach your cruise departure point, for example, those flights will not be protected by ABTA.
If an issue arises with the land or sea elements of your holiday, ABTA will step in to provide either a refund or alternative travel arrangements.
Why is ABTA Important?
ABTA plays a crucial role in the UK travel industry by providing both financial protection and regulatory oversight.
ABTA is important as it allows customers to book with confidence, as they know their money is protected should the accredited travel provider go out of business. Furthermore, ABTA requires its members to treat customers fairly, which includes proper handling of complaints and providing the correct paperwork. The strict code of conduct members agree to follow ensures they are operating ethically and transparently.
Additionally, ABTA also provides guidance to the customer by explaining their rights and offering support when unforeseen travel disruptions arise.
If you have hired a car with an ABTA member, you’ll receive protection for cancellations, changes and refunds.
Therefore, ABTA is important as it allows travellers to have peace of mind as they know they’re always protected and supported.
What Does ATOL Stand For?
ATOL stands for the Air Travel Organiser's Licence. Introduced by the UK Civil Aviation Authority (CAA) in 1973, ATOL was created in response to the rise in overseas travel. Today, it provides financial protection for flight-inclusive package holidays and, in some cases, certain standalone flight bookings.
How Does ATOL Work?
ATOL provides protection for UK holidaymakers booking holidays that include flights. It covers package holidays, adventure holidays as well as combinations of services such as flights, accommodation and car hire. If a travel company making these arrangements fails to do so, ATOL guarantees customers either a refund or, if already on holiday, arrangements to bring them back home.
All UK-based travel companies, including online agents and tour operators, must hold an ATOL certification.
Why is ATOL Important?
ATOL protection means you will be looked after should the company you booked with go out of business or your holiday is cancelled. You will be flown back home if your holiday has begun, or fully compensated if it has not. You may be able to stay on holiday and have additional arrangements made but this is subject to terms and conditions.
ATOL is important because it means that if your holiday provider collapses, you won't be left stranded or out of pocket. If you're already abroad, ATOL will arrange flights back home at no extra cost.
Final Thoughts
Although ABTA and ATOL protect certain holiday bookings, they do not cover every possible expense - like car hire excess charges. To give you total peace of mind, purchase a car hire excess policy from ReduceMyExcess.
Just as ABTA and ATOL safeguard your money if a provider goes out of business, car hire excess insurance protects you from unexpected costs in the event of your rental vehicle being damaged. With an excess insurance policy in addition to either and ABTA protected or ATOL protected holiday, you can travel with confidence knowing you won't be left out of pocket.