Travel agent indemnity insurance explained

November 12, 2008 · Filed Under Travel Agent Indemnity Insurance · Comment 

Operating as an agent responsible for booking people’s holidays can be both profitable and personally rewarding. Getting the right deals or packages for customers looking for their dream holiday is what motivates many people going into the industry. However, booking trips and providing advice in this way is not without its risks, which can include law-related threats. As a professional service, a travel agent is seen as an expert and is trusted by customers to give the right advice and make the right arrangements. One error, even a simple mistake with a date, can ruin someone’s holiday plans. This can affect not only a customer’s holiday but also other parts of their life, such as work commitments. This can then lead a customer to seek compensation, resulting in legal action. It is this eventuality that travel agent indemnity insurance is designed to guard against.

An indemnity insurance policy kicks in when a policy holder is accused of making a mistake, omission or acting negligently and so must defend a court action. It will pay reasonable legal costs and even cover the compensation that might be awarded to a complainant, up to certain agreed limits.

In order for a policy holder to make a successful claim, the mistake or omission must be genuine – it cannot be deliberate. This same rule will apply to other features of the cover. This will often include protection should an individual travel agent or company be accused of defaming someone via libel or slander, or face a claim that they have committed a breach of confidentiality or copyright. A policy will even cover a travel agent should they face a compensation claim after an employee behaves dishonestly and, for example, steals from a customer via credit card fraud or other means.

Once an individual agent or business decides they need a policy, they simply have to decide what level of cover they want. A policy can provide protection for any amount from say, £25,000 to £1 million or more, with the premium calculated accordingly. Excesses will also apply – how much will be decided again by the policy holder.

It is vitally important to judge the level of cover carefully. If it is inadequate a travel agency can end up under-insured. If, for example, a company has £50,000 of cover, but a customer is successful with a legal case which results in a legal bill of £28,000 and a compensation award of £30,000, the company will have to pay the £8,000 difference.