Why Travel Bonds?

  • A Travel Bond is a recognised security guarantee and can be in the form of a bank bond or insurance backed bond. 

    A Travel Bond is calculated as a percentage of your annual projected turnover relating to the packages which require to be financially protected. 

    Typically, when you bond with your bank you will be asked to put cash security against the amount of your bond.  An insurance backed bond tends to be unsecured and you are charged an annual premium based on the financial strength of your company, as illustrated in your latest Year End Accounts and Management Accounts.  

    Travel Bond Insolvency Protection

    Travel Bonds are one of the major insolvency protection options which the 2018 Package Travel Regulations  (PTRs) permit travel organisers to use for non-flight packages. 

    To use this option the Travel Organiser must be a Member of an approved body (approved by Department for Business, Energy and Industrial Strategy (BEIS)). BEIS regulate the approved bodies who then oversee the bonding process to ensure that the bond is at an adequate level to meet insolvency requirements.

    ABTOT & Travel Bonds

    ABTOT is an approved body and ensures that all Members’ bonds are at an adequate level to meet insolvency requirements. 

    ABTOT offers Travel Bonds and a Financial Failure Insurance option to Travel Organisers to comply with the PTRs. 

    Travel Bonds are typically the most cost effective and require less time spent on administration: requiring only quarterly declarations and an annual renewal.

    Every Travel Bond has to be accompanied by ABTOT’s shortfall policy. The shortfall policy is a requirement under Reg 21 of the PTRs and enables a lower overall percentage of annual turnover to be bonded. All Members contribute to the shortfall policy premium based on the size of their travel bonds. It provides a second layer of protection in case the value of Travel Bonds held by the ABTOT Member turns out to be insufficient in the event of a failure.

    Financial Failure Insurance can be useful for start-up travel companies or emerging companies as financial protection is paid on confirmed bookings, which are declared monthly. It does require more administration as detailed declarations are required monthly.  The policy is renewed annually.

    To apply for a Travel Bond or Financial Failure Insurance through ABTOT Membership you will need £10,000 paid up share capital.

    Insurance backed Travel Bonds are also accepted by ATOL for flight packages and for our ATOL Franchise. 

    Travel Bonds FAQ’s

    It was never going to be easy to start up during a pandemic, but the team at ABTOT were really professional and helpful throughout our application process. From the beginning, we felt that they were on our side and wanted us to succeed – they went through it with us as a partner and coordinated other parties as necessary. Despite the challenges of lockdown, there was always someone available if we had a question. When our approval came through, they seemed as pleased and keen as we were to get everything up and running.

    Emily WoolardThe Tartan Road Limited
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