Why Travel Bonds?

  • Travel Bonds can be guaranteed by a bank bond or by an Insurance backed bond. 

    Travel Organisers (Tour Operators and Travel Agents) choose Travel Bonds as security for ABTOT Bonds, ATOL Bonds, ABTA Bond and BCH ABTOT Bonds.  

    Travel Bonds can also be referred to as Holiday Bonds. 

    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 the Department for Business and Trade). The Department for Business and Trade 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. 


    What will happen to my bonding if I sell more holidays than I have projected?

    ABTOT will monitor this via your quarterly declarations. If you exceed your original projections we will review to see if a variation or a ‘top up’ to your original bond is required to ensure you remain compliant with the Regulations. If this is the case, variation terms will be prepared by ABTOT and Travel & General Insurance who underwrite the bonds.

    Can I receive a refund on my bonding costs if I sell less than I predicted?

    The bond amount and premium paid is fixed and cannot be reduced until renewal where a replacement bond is provided based on new 12 month forecasts and full underwriter assessment.

    more Travel Bonds FAQ’s
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