Friends, today we’re discussing everything about errors and omissions insurance (often called E&O). E&O, also known as “professional liability” insurance, is ideal for any business that offers services to clients, particularly those that charge a fee for their services.
Our 2023 travel agent research reports showed that nearly 50% of hosted travel agents and 67% of independently accredited advisors charge some type of fee for their services. It seems like they could benefit from having travel agent insurance!
In this article, we’ll discuss where to get insurance for your travel agency, what it covers, and managing expectations about what it can and can’t do for travel advisors.
What is Errors and Omissions Insurance?
First things first: E&O insurance stands for Errors and Omissions insurance. This type of insurance is common for travel advisors, travel agencies, or tour operators.
Why is it important? Because it can cover the cost of mistakes and oversights you might make. However, it comes with a few limitations. Despite its name, Errors and Omissions insurance doesn’t cover all mistakes or oversights. It’s best to think of it as catastrophic insurance. This means it’s there for those major incidents when something goes wrong.
E&O insurance, also known as Errors and Omissions insurance, is designed to protect you if you make a big mistake at work that leads to a lawsuit. However, it’s important to know that it won’t cover small errors, like booking a client in the wrong room or misspelling a name on a ticket. Instead, E&O insurance is valuable when someone sues you for a large amount of money due to a significant error or oversight. This insurance can save you from financial trouble in such cases.
What Does E&O Insurance Cover?
Errors and Omissions (E&O) insurance is essential for travel agencies, but it’s not one-size-fits-all. Here’s a simplified overview of what E&O insurance typically covers for travel agents:
- Booking Mistakes: If you make an error in a booking that doesn’t benefit the traveler, their family, or yourself, E&O insurance can cover the resulting issues.
- Legal Defence Fees: If your agency is sued, the insurance covers your legal defense costs up to your policy limit, even if the lawsuit is frivolous. This is often the main reason agencies invest in E&O insurance.
However, there are exceptions. Legal defenses are not covered for cases involving sexual misconduct, intentional acts, or criminal actions.
It’s important to remember that each E&O insurance provider writes their policies, so coverage can vary. You might also find additional coverage options and specific protections for different roles within your agency.
Problems Travel Agencies Face
Many people might not realize it, but travel agencies often face lawsuits. If something goes wrong during a trip, the travel agency might be blamed. Even if the problem wasn’t the agency’s fault, they could still be held responsible. If someone gets hurt during the trip, the travel agency could be held liable. Losing a lawsuit like this could be devastating for the business.
The Purpose of E&O Insurance
In Canada, your travel agency could face lawsuits for many reasons. This is where Errors and Omissions (E&O) insurance, also known as professional liability insurance, becomes essential. E&O insurance protects professionals while performing their duties and can safeguard your business in various ways. Here are some potential issues it covers:
- Negligence
- Unintended confidentiality breaches
- Destruction or loss of documents
- Infringement on copyright laws
Like other insurance policies, E&O insurance requires your agency to pay a monthly or annual premium. The benefits far outweigh the costs, and not having this insurance could lead to significant financial losses. It’s crucial to secure E&O insurance as soon as possible to protect your business. Reach out to LiabilityCover today!
What Is the Cost of E&O Insurance?
The cost of E&O (Errors and Omissions) insurance varies based on several factors. For small travel agents, it typically ranges from $25.67 per month, while larger travel corporations may pay around $33.17 per month. The actual cost depends on the amount of coverage, the insurance provider, and the state you live in.
To lower your E&O insurance premiums, you can take steps to reduce risks in your travel agency. For instance, by creating better trip cancellation policies, you can minimize losses from canceled bookings. You might transfer the cancellation cost to the client, which can help reduce the number of cancellations and, in turn, lower your insurance costs.