Is my money protected if the local travel agency goes out of business?

Your money is generally not protected by government-backed insolvency schemes in Sri Lanka if a local agency collapses. Comprehensive personal travel insurance — the one that explicitly covers supplier bankruptcy — is really the only reliable approach to safeguard your investment.

Unlike the Air Travel Organisers’ Licensing (ATOL) system in the UK, Sri Lanka has no centralised financial protection fund aimed at tourists. If an operator stops trading, getting back prepaid deposits can turn into complicated, drawn-out legal matters, and that can take a while. Getting strong travel insurance right after you pay your initial deposit means you can claim back lost funds through your provider.