Why Travel Agents Need Errors and Omissions Insurance
By Harry J. Lew
When you make a mistake as a travel agent, the legal consequences can be disastrous to your career.
The perfect trip exists only in the imagination of highly optimistic travel agents and their clients. If you’re lucky, the trips you plan might only have glitches that annoy you and your customers, but ultimately don’t hurt their overall experience. Other times, things can go significantly awry, causing not only ruined trips but also errors and omissions (E&O) lawsuits that can jeopardize your travel-industry career.
Consider the following true-life cases.
- The experiences of 170 vacationers to Mexico are a cautionary tale for risk-averse travel agents. Reported in the Milwaukee Journal Sentinel over a year ago, these cases involved problems travelers and their family members reported after visiting Mexico’s Riviera Maya. The incidents ranged from blacking out after having one or several drinks, getting robbed or sexually assaulted or even dying. Although the incidents were reported to the U.S. and Canadian consulates, travel agents and tour operators doing business in Mexico allegedly failed to warn future travelers of the hazards of Mexico travel. These omissions created legal exposures for agents who continued to send clients to the region without sufficient disclosures.
- In Philadelphia, eight consumers purchased trips to Disney World for themselves and their children. One paid more than $5,000 to bring her three daughters, her mother, and her nephew to Florida’s Disney World. After taking time off from work and buying her kids $1,000 of new clothing, she brought her family to the bus embarkation area. After waiting a long time for the bus to arrive, she called her travel agent, only to learn the trip had been cancelled. With her kids verging on hysteria, the woman took out a short-term street loan to make new Disney arrangements. Seven other Philadelphia women, all of whom had booked through the same travel agent, had their Disney trips fall through.
- In New York, a man made a $40,000 deposit on an $80,000 African honeymoon safari. He made the trip arrangements in March and April and would have begun the trip to Mozambique and South Africa the following August. However, in July, the Ebola virus broke out in West Africa, 3,000 miles away from the man’s safari destination. Even though the highly infectious virus wasn’t near where he’d be traveling, the man asked his travel agent about buying travel insurance. The agent, who never offered it earlier, told the groom it was too late. Result: the man cancelled the trip, taking a financial hit. Although he received credit for the air portion of the trip, he lost the majority of his safari purchase. The man later sued the agent for $30,000, plus $50,000 in punitive damages.
Each of these cases is unique, but what they share are allegations of travel agent negligence. When customers file lawsuits alleging a travel agent’s actions financially (or physically) harmed them, this creates legal liabilities for the agents involved. And these exposures aren’t abstract concepts: they can involve six-figure legal judgments or settlements and substantial attorney fees. What’s more, even if a judge dismisses a consumer claim against you, you still have to pay an attorney to defend you. At several hundred dollars an hour, this fee can quickly add up.
The importance of E&O insurance for travel industry professionals
Enter E&O insurance for travel professionals. Travel agent E&O insurance is a form of professional liability insurance that safeguards against the financial impact of alleged errors and omissions. In common English, it protects you when you make a mistake or forget to do something important, which ends up hurting a client. Given the mounting litigiousness of society today, having E&O protection for your travel-related business not only shields your business resources against client litigation, it also safeguards your personal assets. For travel agents who have clients with high expectations, having an insurance buffer can provide tremendous peace of mind.
360 Coverage Pros provides a comprehensive, E&O insurance program specifically designed for travel agents, agencies and tour operators that provides the financial protection needed in today’s risky business climate. It features low monthly premiums and the easiest “click and bind” buying process available in the travel industry.
Since the entire world is essentially your office, the potential to make mistakes is almost infinite. There’s the risk of sending a client to the wrong destination or getting the person there too late or too early for an important event. Or you might misread local weather conditions and send a client on an outdoor-adventure trip during a period of sub-optimal weather.
There’s also the classic “no-room-at-the-inn” scenario, in which clients arrive at their hotel late at night only to hear there’s no available lodging for them. Or perhaps disaster strikes well before that point when their airport ground transfer goes missing, stranding them for hours in a strange land. Of course, travel agents may fail to do adequate due diligence on a hotel or resort and send a customer to a poorly maintained property.
Vacations can sometimes implode from the start in cases where an airline or tour operator backs out for financial reasons. In these cases, a client vacation can end before it begins, likely producing more anger and lawsuits than just about any other lapse short of getting injured on a trip.
Having travel agent E&O insurance can help defray attorney costs (and client settlements) in situations like those just mentioned (subject to policy exclusions). Having a financial backstop for such contingencies is essential, but where the rubber meets the road is when agent negligence plays a part in a client’s trip-related injury or death. Many times, customers will sue even if their agent wasn’t responsible for causing their injury; their frustration is so great they will sue anyone even remotely involved with their botched trip.
Travel risks to life and limb
For example, say you plan a Grand Canyon trip for a client. However, she wanders off-trail and falls 25 feet, breaking her leg. You did nothing wrong, but your client seeks to “monetize” her suffering by taking legal action against you. In such a case, your E&O insurance policy would pay for your legal defense of a covered claim.
Another common scenario is clients who are injured in auto or bus accidents while traveling abroad. According to Crisis Medicine, more than one million people are killed each year on the world’s roads and the vast majority of which occur in developing countries that are rapidly becoming urbanized. Poorly maintained roads; too many cars, trucks, and scooters; and aggressive drivers are a dangerous recipe for U.S. tourists who are passengers or driving themselves in a foreign land.
Crisis Medicine claims that road traffic accidents (known as RTAs) are responsible for more travelers’ deaths in the developing world than malaria, typhoid and diarrheal diseases combined. So if you send clients to a region with problematic surface transportation, you may end up ensnared in litigation if they get hurt or killed in a road accident.
According to macroeconomist Jay L. Zagorsky, who published a risk analysis in Quartz, the leading cause of death for U.S. foreign travelers were motor vehicle accidents, killing 167 Americans in 2018. Again, this represented a minute share of the total number of Americans who traveled abroad that year. Still, when one of your clients dies in any kind of foreign accident, your potential legal liability is immense. Having a travel agent E&O insurance policy in place will insulate you from potentially devastating financial judgments or settlements if you lose an ensuing lawsuit.
What’s more, even though travel fatalities are rare, traveling abroad is far from risk-free. Visit the U.S. State Department’s travel advisory website and you’ll read about the countless ways your clients can run into trouble abroad, potentially creating legal liability for your business. Whether such incidents generate injuries or deaths is almost irrelevant. When one of your clients has a nasty experience in a place to which you sent them, there’s always a chance they’ll file a claim against you.
And when a customer loses money due to a travel supplier’s default or incompetence—and you recommended that supplier—then you are at a high risk of being sued.
What’s the bottom line? Whether a client gets injured or killed abroad, suffers an annoying logistical glitch, or has his or her trip implode because of a travel supplier default, you will be legally vulnerable when the traveler returns home. Unless you have unlimited business and/or personal financial resources to self-insure against these risks, it’s time to consider buying E&O insurance for travel agents, agencies and tour operators. The peace of mind such insurance brings will be priceless.
