- A package holiday booked through a UK operator carries financial protection under the Package Travel and Linked Travel Arrangements Regulations 2018, and if the package includes a flight that protection is normally delivered through the ATOL scheme run by the Civil Aviation Authority.
- ATOL states plainly that it is not a form of travel insurance and that travellers are advised to buy travel insurance for medical or other issues.
- ABI members paid 472 million pounds across more than 500,000 travel insurance claims in 2024, of which medical claims accounted for 262 million pounds, or 34 percent of all claims, up from 29 percent in 2023.
- The average medical claim in 2024 was 1,528 pounds, and one ABI member paid over 1 million pounds for a customer who needed emergency hospital treatment in the USA and repatriation to the UK.
- A UK GHIC covers medically necessary state healthcare in the EEA but does not cover medical repatriation, private treatment, or ski and mountain rescue, and is not a replacement for travel insurance.
How package-holiday protection differs from travel insurance
Package-holiday protection and travel insurance solve different problems, and confusing the two leaves a gap that can run into hundreds of thousands of pounds. Package protection is financial protection against the failure of the company you booked with. Travel insurance is protection against things that happen to the traveller: illness, injury, cancellation, lost baggage, and the cost of getting home when something goes wrong medically.
Under the Package Travel and Linked Travel Arrangements Regulations 2018, an organiser selling a package must provide insolvency protection so that, if the organiser fails, travellers are refunded for services not performed and, where carriage is part of the package, are repatriated and where necessary have accommodation financed before repatriation. Where the package includes a flight, the Air Travel Organisers' Licensing (ATOL) scheme, run by the Civil Aviation Authority, fulfils that insolvency-protection obligation.
ATOL is precise about its own boundaries. Its consumer guidance states that ATOL is not a form of travel insurance and that travellers are advised to purchase travel insurance to make sure they have cover for medical or other issues. The FCDO foreign travel advice draws the same line: it notes that whether an insurance policy provides cover if an airline or travel agent goes out of business is typically not standard, and frames ATOL as a separate consumer-protection scheme for air holidays and flights managed by the CAA.
What an ATOL-protected package actually covers
When you pay any amount towards an ATOL-protected booking you should receive an ATOL certificate confirming the details of the booking and the level of protection. According to ATOL's own description, if the travel company fails the scheme can assist you to stay in your holiday accommodation if possible, reimburse money spent to replace ATOL-protected parts of the trip such as accommodation, car hire and transfers, and arrange flights home depending on the circumstances.
The trigger for all of this is one specific event: the company that sold you the package failing as a business. ATOL is explicit that you cannot claim under the scheme for cancellations, complaints, sickness, injury, or substandard hygiene during your holiday. Those are personal travel incidents, not operator insolvency, and they fall outside what package protection is designed to do.
The medical and repatriation gap a package does not fill
The largest single risk on a foreign trip is usually a medical one, and that is exactly the risk package protection does not touch. The FCDO advises that travel insurance should cover treatment in state or private hospitals, noting that emergency treatment and hospital bills can be enormously expensive. It also flags emergency transport such as an ambulance, which is often charged separately to other medical expenses, and emergency travel home on medical grounds, which it describes as potentially very expensive. It further advises that policies cover repatriation costs if a traveller or a family member dies abroad.
The scale of that gap is visible in the claims data. ABI members paid 472 million pounds across more than 500,000 travel claims in 2024. Medical expenses were the most common reason for a claim, making up 34 percent of all claims, up from 29 percent in 2023, with a total value of 262 million pounds and an average payout of 1,528 pounds. One ABI member paid over 1 million pounds for a single customer admitted to hospital for emergency treatment in the USA and then repatriated to the UK. None of those costs would be met by ATOL or by the package operator's insolvency protection, because the company had not failed: the traveller had simply fallen ill or been injured.
Where a GHIC fits, and where it stops
A UK Global Health Insurance Card is sometimes treated as a substitute for insurance on a package holiday inside Europe. It is not. The NHS describes the GHIC as free, lasting up to five years, and covering state healthcare that cannot reasonably wait until you return to the UK in EEA countries and some other nations, including care for existing conditions and routine maternity care.
The exclusions are where the gap reopens. The NHS states that a GHIC does not cover being flown back to the UK (medical repatriation), treatment in a private medical facility, or ski or mountain rescue, and that a UK GHIC is not a replacement for travel insurance. On a package holiday, repatriation after a serious accident or illness is frequently the single most expensive element, and it is precisely what a GHIC leaves out. The FCDO notes that some insurers may waive any excess on medical treatment if you use an EHIC or GHIC, so carrying both can reduce out-of-pocket costs, but the card does not remove the need for a policy.
Cover limits and exclusions to read before relying on a package
Even where a traveller holds both package protection and a travel policy, the policy itself carries limits and conditions that decide whether a claim is paid. The FCDO advises checking that a policy covers the full length of the trip, noting that many policies have a maximum trip length or an annual limit on total time spent outside the UK. It warns that travellers should declare existing conditions or pending treatment or tests, because failing to declare something may invalidate the insurance. It also notes that cruises generally require an additional level of cover because it is harder to reach hospital for treatment, and that activities such as bungee jumping, jet skiing, winter sports or skydiving are not usually included in standard policies.
A package booking does not soften any of those conditions. A traveller who books an all-inclusive resort package but undertakes a quad-bike excursion, an off-piste ski day, or a cruise extension can find the medical element of a claim declined for reasons unconnected to the package operator. The package protects the booking; the insurance protects the person, and only within the terms the traveller agreed to.
Common pitfalls when buying for a package holiday
Several recurring errors leave package travellers under-protected. The first is assuming the ATOL certificate is a form of medical cover; it confirms insolvency protection only. The second is buying insurance that ends before the trip does, or that breaches an annual days-abroad limit, both of which the FCDO highlights. The third is relying on a GHIC for a European package and discovering, after an accident, that repatriation and private treatment are excluded.
A fourth pitfall concerns disputes. The Financial Ombudsman Service can consider complaints about travel insurance claims that a policyholder believes were wrongly declined, including disputes over pre-existing conditions and cancellation. That route exists for the insurance policy, not for the package: a refused medical claim is an insurance matter, while an operator collapse is an ATOL or Package Travel Regulations matter. Knowing which protection applies to which problem is the difference between a paid claim and an unrecoverable bill.
Does a package holiday include travel insurance?
Not as standard. A package holiday booked through a UK operator carries financial protection against the operator's insolvency under the Package Travel Regulations 2018, delivered through ATOL where a flight is included. ATOL states that it is not a form of travel insurance and advises buying a separate policy for medical and other issues. Some operators sell insurance alongside the package, but it is a distinct product with its own terms.
If my package holiday company goes bust, do I need travel insurance to get my money back?
For the refund and repatriation itself, no: ATOL protection and the Package Travel Regulations are designed to refund payments for services not performed and to repatriate travellers who are abroad when the operator fails. Travel insurance becomes relevant for the separate risks of illness, injury, cancellation for personal reasons, and lost baggage, none of which the insolvency schemes cover.
Will my package operator pay if I am hospitalised abroad?
The package operator's insolvency protection does not pay medical bills; it is triggered only by the operator failing as a business. Emergency hospital treatment, ambulance transport and repatriation are the responsibility of a travel insurance policy. ABI members paid 262 million pounds in travel medical claims in 2024, with an average medical claim of 1,528 pounds and one single case exceeding 1 million pounds.
Is a GHIC enough for a European package holiday?
No. A UK GHIC covers medically necessary state healthcare in the EEA but the NHS states it does not cover medical repatriation, private treatment, or ski and mountain rescue, and is not a replacement for travel insurance. The FCDO notes some insurers waive the medical excess if you use a GHIC, so carrying both alongside a policy can reduce costs.
What does ATOL not cover?
ATOL does not cover cancellations, complaints, sickness, injury, or substandard hygiene during a holiday, nor lost baggage or missed departures. It activates only when the travel provider fails as a company. ATOL itself advises buying travel insurance for medical and other issues.
Sources
- FCDO: Foreign travel insurance (GOV.UK)
- Association of British Insurers: travel insurance tips and 2024 claims figures
- NHS: Apply for a free UK Global Health Insurance Card (GHIC)
- Civil Aviation Authority: what does ATOL protection mean
- The Package Travel and Linked Travel Arrangements Regulations 2018 (legislation.gov.uk)
- Financial Ombudsman Service
