If you purchased a holiday as part of a package with an ATOL-protected travel agent (a financial protection scheme that tour operators can sign up to), you're covered for any part of the holiday where a company you're dealing with goes bust, be it flights, hotel or car hire.
In this situation, contact your travel company asap to organise travel or accommodation; thankfully the company's also responsible for any additional costs, so you won't be out of pocket. Use ATOL's search facility to check if your tour operator's ATOL protected.
However, it's crucial to understand that DIY holidays, where you book all the elements yourself separately (ie, flight, hotel, transfers), do NOT get any cover from ATOL. The only way to get any level of protection is via the Section 75 route above, so try and make sure you use a credit card for some of the cost - read the Section 75 guide.
Most travel insurance policies WON'T cover companies going bust, unless you specifically requested it and the provider agreed to include it.