The Package Travel, Package Holidays and Package Tours Regulations created in 1992 mean that tour operators and travel organisers are now responsible not only for their own activities but also those of their suppliers, such as hotel or accommodation providers and transportation services.
Under these regulations, members of professional bodies – such as the Association of British Travel Agents (ABTA), the Association of Independent Tour Operators (AITO) and the Travel Trust Association (TTA) – are required to purchase adequate insurance as a condition of their membership.
Whether you are a tour operator or travel agent, it is important to properly protect your business against potential risks. Some of the common policies offered in an insurance package for tour operators and travel agents include:
Public liability insurance can be an important part of your insurance package and is specified in the 1992 Regulations as necessary cover. This cover can provide financial assistance to defend against, and pay compensation for, claims from third parties that your business has caused them to suffer injury or illness – or that it has caused damage to their property.
It is worth ensuring your public liability insurance includes worldwide cover, so you are protected whether customers are at your business premises, or on their holiday and under the care of your suppliers. Claims resulting from any negligent acts or omissions of your agents, suppliers and sub-contractors can also be covered under product liability insurance. Insurers often include a specific percentage of cover (usually 25% of your annual turnover) for dynamic packaging where customers create a bespoke package, choosing their own flights, accommodation and car rental. For more information on cover for one off events, visit our public liability for events page.
Professional indemnity insurance is useful for any professional offering a service or advice. This cover can provide financial assistance if you need to defend against claims that your service or advice has caused your customer physical, material or financial harm. This includes any claims brought against you due to the actions of your suppliers. This cover is often offered on a worldwide basis so you’re covered while your customers are on their holiday.
Professional indemnity insurance can cover: * Negligent acts and omissions. * Liability under the Data Protection Act. * Mishaps during the arrangement of visas. * Misinterpretation of brochures and advertising material. * Incorrect information in brochures and advertising material. * Breach of contract. * Breach of confidentiality. * Libel and slander.
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If you employ staff at your travel agency or as part of your tour operating business, you are legally required to purchase employers’ liability insurance. This can cover claims by your staff that working for you has caused them to suffer illness or injury. This cover includes employees temporarily working abroad under a UK contract of employment, including tour directors and freelancers. If you do have staff working abroad, it’s worth ensuring overseas contingent employers’ liability insurance is included in your insurance policy.
You may also consider purchasing employee dishonesty insurance, which can provide compensation if your business suffers financial loss due to the fraudulent acts of an employee.
The ABTA sets out a Code of Conduct in which tour operators are required to provide ‘general assistance’ if their customer suffers an accident due to an activity outside of the holiday they have booked with you. This includes helping your customer with legal costs and hospital costs.
If you own your business premises, you may benefit from building insurance, which can provide financial assistance if the structure of your building and its fixtures and fittings are in need of repair or replacement. If you are a tenant, you may be able to rely on your landlord’s insurance, but can purchase tenants improvements insurance to protect any changes you make to the building – including glass cover to protect any window signage you have added.
It is important to include damage to venues as part of your insurance policy, including vessels such as cruise ships.
Contents insurance covers the items in your travel agency including office equipment, furniture, plants and decorations and trade equipment. You may consider purchasing specific business equipment insurance, or business gadget insurance, to specifically cover portable equipment such as laptops, phones and tablets. These covers can provide financial assistance if you need to repair or replace your business items after damage, theft or loss.
Cash on premises cover can be a useful addition to your insurance package and provides protection for your business money, whether it is in your cash register, in a safe, or in transit to and from the bank. This cover often includes assault cover, which can provide financial assistance if you are assaulted during the theft of your business money.
Business interruption insurance can be a useful feature of your wider insurance package. It can cover any loss of revenue or income you experience while you are unable to trade due to an interruption to your business. It is important to note that this interruption must have been caused by an event covered in your insurance policy. Business interruption insurance can also pay for costs associated with trading from a temporary location.
It may be worth purchasing business travel insurance if you have staff that travel abroad on a regular basis as part of their employment with you. This cover typically includes medical and legal expenses, personal accident, personal baggage and money, cancellation or curtailment of flights and other bookings, missed departure, hijack and kidnap, and the employee’s personal liability.
If your business employs executive-level members, you may consider purchasing Directors and Officers insurance which can provide protection if these members are accused of committing wrongful acts during the course of their work with you, such as breach of trust or releasing misleading statements.
If your customer suffers distress while on their holiday, you may be liable to pay any expenses involved in the management of this crisis. This cover typically includes a 24 hour telephone assistance helpline, and comprehensive cover for a range of critical situations such as kidnap, plane crash and terrorism. This cover can also include public relations expenses to help regain any loss of reputation you suffer due to this incident.
Further options you may consider include:
Vehicle insurance: If your business involves the regular use of vehicles, it may be worth purchasing vehicle insurance which can provide protection against fire and theft, as well as injury to third-parties. These third parties can include your customers and employees.
Computer cyber liability: This can provide protection against cyber risks that your business might face, such as virus or hacker activity.
Travel bonds: These are a way of protecting your customer’s money, and helps ensure that your customer is brought home from their holiday if your travel company goes out of business. This usually applies to package holidays although some flight-only holidays may also be eligible.