E&O coverage provides Travel Agents with a defense until the matter is resolved
Written By: Chris Buseman, Account Executive – Specialty Insurance Programs – 360 Coverage Pros
Travel industry professionals, such as travel agents, travel agencies, and tour operators, have an increasing need to protect themselves against the economic impact of accusations of alleged errors and omissions. Besides the increase in frivolous litigation initiated by consumers seeking to make money off your business’s errors, whether real or perceived, travel industry professionals also have to remain compliant with local, state, federal, and international regulations. All of these factors can take their toll on your bottom line.
You may not mind serving clients with higher expectations — in fact, your business may be built on a reputation for meeting those expectations. But in order to safeguard your assets and keep those customers coming back, you’ll need coverage that protects you while engendering confidence and loyalty among your clientele.
How Does E&O Coverage Support Compliance?
Travel agencies must adhere to certain laws when they are arranging trips for their customers. Depending on where their clients are going, they may be subject to the following:
- Federal law
- State law
- International law
State laws, for example, may have statutes that regulate disclosure and fraud, as well as policies for businesses to issue refunds or sell certain services. This places responsibility on the agent or agency to investigate and disclose information about the destination and also confirm reservations.
As an example of how E&O coverage works hand in hand with maintaining compliance, consider a common travel scenario. A couple books a trip, including a stay in a hotel. Upon arrival, they are told that there is no available room or that the only room available is one that costs considerably more. The hotel claims the booking was not confirmed. Understandably, the couple thinks that the agent is at fault and may initiate a claim. They may even file a lawsuit.
E&O coverage would provide the agency with a defense until the matter is resolved. A compliant agency would be able to provide evidence that it had done its due diligence and confirmed the customer’s booking, particularly through documentation and proof of best practices. The fraudulent activity of the hotel or resort management would be exposed, and the agency would be cleared. E&O coverage would pay any legal fees, and the company could resume business with its reputation intact.
What Makes E&O Coverage So Important?
In 2020, there were almost 50 class-action lawsuits filed against travel agencies, and that doesn’t count individual lawsuits and complaints. With society becoming more and more litigious, there is an increased need for businesses to protect themselves, and this is perhaps more notable in the travel industry. There are a number of facets to the travel business that can leave a company open to litigation:
- Promises to clients. By nature, the travel business requires a certain level of commitment and promises. Customers want a memorable vacation, and many destinations are advertised as providing such memories and experiences. The problem is that when things go wrong, promises are difficult to uphold, and the reputation of your travel agency or tour company is at stake.
- Advertising. Besides advertising for your company, your agency likely advertises for partners. This is because you are providing services that depend on the reliability and services of those partners, whether they be airlines, hotels, resorts, bus companies, and so forth. The issue is when those companies don’t deliver the expected services or when the reality doesn’t live up to the expectations created by the advertising. And because your agency may be legally or at least ethically responsible for verifying the accuracy of what’s advertised, the customer may turn on you.
- Contracts and agreements. There’s often no way to anticipate what may go wrong on a trip, and unless your contracts and agreements with your clients and partners are clear, your agency may be left open to legal attacks.
E&O insurance is critical to protecting your company from these vulnerabilities and unforeseen complications. Depending on the details of your policy, you may be able to rely on your insurance provider to:
- Provide a legal defense attorney or pay your existing attorney’s fees
- Cover court administrative expenses
- Pay for settlement costs and alternative forms of arbitration
- Assign a claims adjuster to handle the claim against your business
- Consult with expert witnesses and hire them in your defense
E&O Insurance Protects Your Agency at Minimal Cost
E&O insurance provides a cost-effective solution to protecting your company from frivolous claims and litigation. It offers peace of mind, improves turnaround for customer service issues, and protects your bottom line. Experienced E&O insurance providers, such as 360° Coverage Pros, offer rates as low as $25.67 per month, meaning you can get this kind of protection without delay. Schedule a free consultation right away and make sure your agency is covered.