Holidaymakers urged to check travel insurance as more operators expected to fail

The collapse last week of Ireland's biggest tour operator has prompted a warning to all holidaymakers to check their travel insurance to see if they are covered for tour operator failures.

Accountants PriceWaterhouseCooper has warned of a potential 'time bomb' for travel companies following Budget Travel's collapse.

So far this year, the rate of travel company solvency has been 13 per cent higher than during the same period of last year, that was in spite of the big crash in 2008 of XL Leisure.

While package holidays booked through UK-registered companies are usually protected by ATOL or ABTA bonding, any items booked separately - such as car hire, excursions or internal flights - might not be covered.

For this reason, holidaymakers should check the small print of their travel insurance to make sure they will be able to claim back any money they have paid out to any third party if their holiday firm goes bust and their trip is cancelled.

PriceWaterhouseCooper direct Ian Oakley-Smith said: Despite an increase in failures this year, the travel sector has experienced a relatively low rate of insolvency, compared to other hospitality and leisure sectors, so far.

This is starting to change as we see big names such as Budget Travel fall foul of the recession.

""While the weak pound and domestic holidaymaker benefitted many travel companies, there is also an element of lenders not wishing to add to the company casualty list and propping up loss making businesses.""

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