Your Money: Be prepared for the holiday from hell

If your destination turns out to be less than paradise, what can you do? Lots, as it happens, as Ian Hunter explains

A strong pound and a flurry of windfall shares have encouraged British holidaymakers to venture abroad in their droves. In many cases, bookings are last-minute affairs, bargain-hunters combing travel agents' windows for special deals. Sadly some holidays - and many "bargains" - turn out to be truly memorable for all the wrong reasons. There's nothing you can do if the sun won't shine but here are a few tips worth bearing in mind if things do turn sour.

Right at the outset, when booking your holiday, take a few moments to check carefully the cancellation provisions. The financial penalties increase as the departure date nears. If you think you may have to cancel it may be better to wait until you are sure you are free to travel before booking.

It is usually best to book by credit card. By this method holidaymakers can secure extra protection. Under section 75 of the Consumer Credit Act 1974, credit card companies are jointly liable if the agreed goods or services, costing at least pounds 100, are not supplied. This provides the traveller with the option of seeking reimbursement from the credit card company as an alternative to the tour company. The right is particularly useful if the tour operator has gone out of business. However, charge card issuers, such as American Express, are not bound by the same obligations although, in practice, they may be prepared to consider compensation as a goodwill gesture.

The Package Travel Regulations, which came into force several years ago, have increased the liability that tour operators must accept if a holiday goes wrong. The effect of the regulations, subject to a number of exceptions and defences, is that tour operators must now accept liability for the actions of their suppliers, such as hoteliers, airlines and excursion organisers.

Additional protection is provided in cases where holiday companies go bust and holidaymakers either lose their deposits or find themselves stranded abroad.

Consider booking your last-minute holiday through a tour operator who is a member of Aito or Abta. All tour operators are covered by the Package Regulations, which aim to protect all holidaymakers. However, in addition, both Abta and Aito provide a procedure for settling disputes short of court action to holidaymakers booking through one of their members. The advantage with these procedures is that a dispute can be settled without the need to resort to the courts.

If things go wrong at your destination, it is important that you raise any complaint with the tour representative at the earliest possible opportunity. The tour operator must be given the chance to remedy any shortcomings as soon as possible.

This is because when a breach of contract has occurred (such as the accommodation not fitting the description given) the holidaymakers are under a duty to try to reduce their loss, so the tour operator must be made aware of any problem in order to have a chance to sort things out. If you have to pay for anything, make sure you keep the receipts so that you can claim the expenses later.

You cannot normally get a full or partial refund purely because the holiday did not meet your expectations. Usually the law does not provide for an award of damages purely for an injury to feelings, annoyance, or any social embarrassment caused by the breach of contract.

Damages are usually only awarded for an identifiable financial loss. However, the Court of Appeal has allowed an exception to this principle, if the tour operator fails to provide the facilities promised. In one case a tour operator had promised accommodation to its clients for 14 days but provided it for only a single day. The holidaymakers were awarded pounds 250 for distress, inconvenience and loss of enjoyment.

Check out the insurance policies on offer. The insurance cover invariably offered by your tour operator may not be the most cost-effective and may not address your particular needs. Even if you are planning on leaving within 48 hours, it is still possible to pick up cover over the phone.

There are several different types of standard policy. If you travel a lot it may be cheaper to obtain season-long or all-year cover. Ensure that the medical cover is adequate. Check that the personal baggage allowance is high enough to cover all losses, as it is sometimes unrealistically low. Delayed baggage can ruin a holiday as much as lost baggage. It is advisable to check how long baggage must go astray before compensation is available to buy replacementsn