That's a tricky question. Ian Taylor reports

Travel provides more than its fair share of work for lawyers. There is a lot that can go wrong - from minor difficulties to the collapse of a travel company, or an accident resulting in injury - even death. Any resulting legal case can be complex, with several companies involved and all keen to deflect liability.

Recently, the legal process has become even more complicated, thanks to a seismic shift in the way travellers book their holidays. The travel industry, in an attempt to clarify who is liable for what when things go awry, is now obsessed by the need to distinguish between a company acting as an "agent" - the retailer - in a transaction, and one that provides the flight, hotel or car hire - known as the "principal".

It is the principal, rather than the agent, that is liable in the event of a problem - so this distinction is important to consumers. If holidaymakers are not aware of the difference, they can find themselves without cover, even if they have taken out travel insurance.

In the old days, before the internet and budget airlines, the situation was clear. Most travellers bought a package holiday provided by a tour operator and booked through a travel agent - thus making the tour operator the principal.

The package travel regulations of 1992 enabled UK holidaymakers to go to the UK courts if they broke a leg in Benidorm due to the negligence of a local hotel. Also, the Air Travel Organiser's Licence (Atol) regulations ensured financial protection for consumers if one of the companies providing holiday services went bust.

Both sets of regulations remain, but many of the former certainties have gone. These days, people can still buy a traditional package holiday, or they can go it alone and buy a flight and pay for a hotel on different websites.

In between these two extremes is a grey area where, for example, traditional travel agents and online travel retailers also use the internet for some bookings. This need not be a problem so long as the situation is clear. But research suggests that most people are not aware of the implications. When the budget carrier EUjet collapsed in 2005, it left 39,000 UK passengers abroad or booked to fly. A survey by the UK air travel regulator, the Civil Aviation Authority, found two-thirds believed their flights and money were protected, but only 130 (a tiny 0.3 per cent) were right.

Andrew Morton, head of the travel team at Manchester solicitors Pannone, said: "A package provides powerful consumer protection.There are lots of obligations on the person selling the holiday. If things go wrong you have the right of redress in the UK, and you are covered for everything if, say, a flight is cancelled and you don't turn up at the hotel."

Legal redress in the UK is vital, given the costs of dealing with differing legal systems and the difficulties of translation. But Mr Morton emphasises that, for those who have not bought a package, it's very different. "People think they are covered by their travel insurance, but find they are not."

The broad outlines of legal protection are not in doubt. Pick a package holiday from a brochure in the traditional way and you are covered. Do it yourself on different websites and you put yourself outside the package regulations. It is the area in between, said Mr Morton, whether buying online, over the phone or on the high street, that is tricky.

He suggests: "If you are sitting in a travel agency, ask 'Am I covered?'. Over the phone, you can do the same, but will probably find companies volunteer the information." In all cases, the invoice you receive is crucial. It should clearly identify any company acting as an agent and give full names of every principal or supplier involved. Being asked to pay separately for individual items signals that the company you are buying from does not regard what it is selling as a package.

"But even this may be problematic," said Mr Morton. "It indicates what the person selling the holiday believes, but not necessarily the position in law. If there is a problem, do not accept what a company tells you. The industry does not really know because the law has not kept up with changes in the way people book holidays."

The legislation is under review in Brussels but it will be three or four years before any changes come through. And, until the law does catch up, all you can ultimately do is to seek clarification, before you book, about whether a holiday is covered by the package travel regulations and is, therefore, financially protected.