In the early days the majority of holidays were booked by package and had the Atol/ abta cover if your holiday company went bust. However, these days less than half of holidays booked are not package eg flights and accommodation are booked separately and not covered by Atol / abta.

This has caused the government to rethink and from today, booking seperates with the same company maybe covered by Atol , however, the small print has resulted in clients just not knowing whether they are covered or not. Some online companies have made it clearer and have annnounced that premiums of around £2.50 have been added to cover the cost.

Note you must have booked both the flight and accommodation and possibly transfers as well (not quite sure of the latter). So you would have ask each company whether you are actually covered or not.

What you are still not covered for is booking hotels or flight separately with different companies.

Members of the government are still not happy with the latest laws and have told their own cabinet to go back and rethink

http://www.travelweekly.co.uk/Articles/2012/02/16/39611/analysis-your-guide-to-atol-reform.html

Also booking with the credit card over £100 will give one a certain amount of cover but even the banks cover under the card has thrown up anomalies because if your airline goes bust and you have booked it through a third party you will not be covered.

https://majorcaforum.forumotion.com/t5141-huge-credit-and-debit-card-fees-charged-by-airlines-set-to-end-in-2013?highlight=credit+card

Yeah this has been a real grey area for a while now, your flight company goes bust you get that cash back but your hotel company is still there and you cant make it now ,tough you dont get any help, £100's down the drain, I think this has actually started putting travellers off doing DIY with all these companies going bust these days, I know we think about this alot now, we have felt safer booking JET2 holidays which has been much cheaper than others over the last couple of years.

That is true mate, I always book DIY, as that is my choice. But you never know if something could happen to Easyjet, or Ryanair, or whoever it may be you fly with. At least booking with a travel company, you don't incur too much of a loss, if at all.