Following Lowcosttravelgroup recently going bust, many families are anxious to know how their money and holidays are protected should any problems arise with their booking.

Our Q&A below explains what protections and refund rights you have whether you book direct via an airline or via a travel agent.

Q) I booked a flight direct from an airline, what happens if the travel operator goes bust?

A) When you book a package holiday or flight-plus holiday (more on this below) with a UK travel operator, they must be ATOL protected, which means you should receive an Air Travel Organiser’s Licence (ATOL) certificate.

If you’re just booking a flight directly from an airline, such as British Airways, there’s no legal requirement for the booking to be ATOL protected. But the Civil Aviation Authority which runs the scheme says some airlines may decide to offer this protection to customers.

If your flight-only booking is not ATOL-protected and the airline were to cease trading, there are three possible ways to get your money back, depending on the method of payment used to buy the flight and whether you have any existing insurance:

Section 75: If you pay for anything costing between £100 and £30,000 with a credit card, Section 75 of the Consumer Credit Act means you can claim your money back from the provider if there’s a problem with goods or services due to a breach of contract.

Chargeback: If you pay by debit card or a Visa, MasterCard or American Express credit card for an item that costs less than £100, you may be able to use ‘chargeback’. This is when your card provider can try to get your money back from a retailer – but is not legally obliged to – if goods are damaged, not delivered or not as described.

With both Section 75 and chargeback, the card provider should be able to compensate you, but it may not pick up the bill for a new flight booking if you’re left stranded abroad.

Travel insurance: Some travel insurance policies provide protection against scheduled airline failure, so check the document to see if you can make a claim.

Q) I booked a flight from an airline and then separately booked hotel stay/or car hire from another company, what happens here?

A) In this scenario, it is likely neither of these bookings will be ATOL-protected.

As above, if booking a flight only, airlines do not need to provide ATOL protection so this DIY-style holiday is unlikely to be covered. You may be able to get your money back via Section 75, chargeback or your travel insurance. Accommodation-only bookings are not covered either.

Q) I booked a flight and hotel stay/or car hire from a UK based travel agent, am I protected?

A) This kind of booking, where you pay for a flight from a UK travel agent, in addition to accommodation and/or car hire, either at the same time or the next day, comes under the protection of the ATOL Flight-Plus scheme.

While it’s not considered a traditional package holiday, this arrangement is financially protected by ATOL. If the travel agent were to go bust, ATOL protection would ensure you were not left stranded abroad if you’ve already departed, or if you’re yet to leave, it would ensure you get all your money back.

If you have a problem with the accommodation, such as it being noisy or dirty, The Association of British Travel Agents (ABTA) says you would need to take this up with the hotel, as legally, it’s not the booking agent’s responsibility.

ABTA adds that if you go through a booking site that redirects you to a tour operator or travel site, your contract is with the company signposted in the contract.

Q) I booked just accommodation or car hire through a travel company, am I protected?

A) Unfortunately, you won’t be ATOL-protected if you book just accommodation or car hire.

Q) I booked a package holiday through a travel agent, what are my rights if things go wrong?

A) Package holidays must be ATOL-protected and this kind of all-inclusive booking provides holidaymakers with the best level of protection should something go wrong.

If your travel company fails and your holiday can no longer go ahead, you’ll be entitled to a refund if you’re yet to travel and hotel costs and transport home if you’re abroad.

Anything else I should know?

When heading away on holiday, it’s advisable to buy travel insurance. The Association of British Insurers (ABI) says travel insurance won’t typically cover costs incurred in the event of a travel firm failure as its main purpose is to cover emergency medical expenses.

Nel Mooy, head of travel at AXA Insurance, said: “When people are booking holidays, they should always check that the travel agent is ATOL-protected. This gives customers going through this route a significant level of protection.

“If people are booking independently i.e. not using a travel agent or package holiday, then they should make sure that they buy travel insurance and select a provider that includes travel disruption cover in the policy. This gives independent travellers cover if their holiday arrangements are affected for a variety of reasons.”