Errors and Omissions (E&O) insurance is commonplace across all industries, and the travel and tourism segment is no exception. As a travel agent, you need to know that you are covered in the smallest percentage of times when a catastrophe actually happens. Keeping yourself covered and preparing for the worst may come in handy one day.
As a travel agent, understanding what E&O insurance is and how it can protect you is essential.
E&O insurance can give travel agents peace of mind for those “will never happen” moments. If a client gets injured while on vacation, you do not want to be responsible for any part of the situation. That’s where E&O insurance is most beneficial. So what is it, what does it cover (and not cover), and how can you obtain a policy as a travel agent?
Any professional who provides a service for a fee needs E&O insurance.
Errors and Omissions insurance can be described as professional liability insurance to protect a company, its staff, and other professionals against claims regarding inadequate work or negligent actions. Anyone providing a service to others needs E&O insurance, including but not limited to financial professionals, insurance agents, doctors, lawyers, and wedding planners. And, since travel agents provide travel accommodations for set fees, E&O Insurance is highly recommended.
What does E&O insurance cover, and what doesn’t it cover?
What is covered in an E&O insurance policy?
E&O insurance may not necessarily cover your $500 mistake of booking the wrong room for a client, but if someone sues you for a massive amount, you will be thankful you have it. No matter how time-consuming the lawsuit or the outcome, your policy may cover legal and court costs up to your policy limit or until proven guilty. Some things that E&O ins. often covers are:
- Errors and oversights during the course of working with a client.
- Failure to meet deadlines.
- Failure to deliver a specific service promised.
- Failure to meet a certain standard of care.
- Professional negligence.
- Breach of contract.
- Specific settlements or judgments if the company is found at fault.
- Damages and expenses to others for wrongdoing.
As a travel agent, it is important to read through all policies carefully, as they can differ with clients, niches, and travel destinations.
What is not covered by E&O insurance?
Some things are not covered by E&O insurance, including legal defenses involving sexual misconduct, intentional acts, and/or criminal acts. It also does not cover other types of damages that are traditionally handled by another branch of insurance. For example, E&O insurance often does not cover bodily injury caused by your business since it typically falls under general liability insurance coverage.
It also may not cover the following:
- Criminal prosecution and liabilities that come up in civil court not previously listed in the policy.
- Temporary employees and associated fees.
- Claims from work done before the policy officially became effective.
- Claims from various jurisdictions.
- Information leaks and cybercrime.
- Employee injuries.
- Discrimination claims.
- Pandemic-related issues that require specific benefits.
How does E&O insurance apply to travel agents’ services?
To make sure your clients’ travel plans are covered, you need to offer E&O insurance to every new client.
By having every client sign a travel waiver, whether or not they accept, you will protect yourself from worst-case scenarios. Attorney Chun T. Wright advises that “a waiver can help educate travelers and participants about the risks of travel (and screen out travelers who are not suited to the trip).” Waivers can protect agents, their agencies, and their clients from legal claims ranging from minor mistakes to catastrophes, even death.
With every new trip, there should be a new waiver for your clients to sign that clearly states you have given them the option to purchase travel insurance. It will save you from a headache if you ever need to prove that you did, indeed, offer it.
E&O insurance experts say to consider having the following when implementing travel waivers into your business.
- A list of both normal and special risks of a trip and any activities included. Risks such as lack of access to medical facilities in remote areas need to be acknowledged. Having to be quarantined, contracting an illness, or encountering unsafe roads and infrastructure can be an unnecessary risk a traveler may want to avoid if the dangers are clearly made known to them.
- A release clause for your business from damage claims related to the risks of their trip and/or activities. This clause should stand out with bolded wording and a larger size/different font to make sure it catches the traveler’s attention.
- A statement saying you are not responsible for the actions/inactions of associated suppliers.
- A section stating the traveler understands and voluntarily assumes any risks, both known and unknown, tied to the trip or activity.
- A section stating the traveler understands your role in offering traveler’s insurance and their responsibility in understanding the coverages on the policy.
- A section that sets out where disputes will be addressed (usually the agent’s location) and by which forum (state, federal court, or arbitration) and the governing law.
- Documentation of the type of travel insurance that was offered, sealed with legal jargon. Notarized and digital copies are a great idea.
You may also want to use a blanket statement for your travel waiver that might look something like this:
“[YOUR AGENCY] offers retail travel services to customers, which are provided by separate and independent vendors of travel services. [YOUR AGENCY] does not operate, control, or otherwise provide the services of independent travel vendors. Hence, the customer agrees that [YOUR AGENCY] acts only as an agent for the client in acquiring transportation, hotel accommodations, sightseeing, and other privileges, or services for the client’s benefit, and on the express condition that [YOUR AGENCY] shall not be responsible for any loss, accident, injury, delay, defect, omission or irregularity which may occur or be occasioned, whether by reason of any act, negligence or default of any company or person engaged in or responsible for carrying out any of the arrangements, or otherwise in connection therewith.”
In addition, make sure your clients sign off on looking over their own itinerary. Be sure they know they are taking the responsibility for pointing out if names have been misspelled or if the travel dates are wrong, for instance. As an agent, your job is to know and inform clients of special circumstances like whether or not visas or passports will be required; customs and procedures for taking children out of the country without both parents, and the proper documents needed for getting married outside of the U.S.
Every agent needs to become familiar with a variety of scenarios that might require E&O insurance coverage.
The U.S. State Department’s travel advisory website shares countless ways travelers (your clients) can run into trouble abroad, potentially resulting in legal liability for you and your business. If your clients have a terrible experience in a place you sent them, you never know if they will file a claim against you.
How can you get E&O insurance as a travel agent?
How can a travel agent obtain E&O insurance?
Travel agents can obtain Errors & Omissions insurance rather quickly, sometimes within a few minutes. Most insurance providers have them, so you can even call the company that handles your homeowners or car insurance, and ask them to add E&O insurance to your existing policy. The cost of an Errors & Omissions policy will be based on total agency sales. You will need to know this information in order to get more exact pricing.
Travel agents can also purchase E&O insurance from companies that cater specifically to the travel and tourism sector. Companies such as Aon, The Hartford, and 360 Coverage Pros can be great choices for solo agents and for agencies as well. Also ask your networking friends, travel advisor associations, and/or host agencies about any preferred E&O providers they like to use—it could save you money!
Host agencies can give you more peace of mind by adding you to their agency E&O policy.
As a solo entrepreneur, you have many choices on how to obtain your E&O insurance. Another possible option is to sign up with a host agency. Host agencies sometimes prefer to cover their agents under an agency policy, as they are often able to get better rates on group plans. Every agency is unique, so you may have to shop around. If you’re looking for a host agency that can give you the support you need as a travel agent, Pickles Travel Network is a top-rate choice.
If you’re an agent just starting out in your new business venture, you need Errors & Omissions insurance as soon as possible. Protect yourself, protect your business, and protect your clients.