Taking out an insurance policy to cover legal risks might be unusual to some professionals but to others it is a tried and trusted way of guarding against a business’ vulnerability. Those who offer professional advice, such as travel agents, both as a freelance and as a full agency have a responsibility to deliver a professional standard of service to clients. Should this fall below what customers and clients expect, some of them may be minded to take legal action, particular if they have suffered what is known in the business as a financial injury. Travel agent professional insurance is one way of guarding against the chances of a legal claim damaging your business.
Cover like this works by guaranteeing to pay your legal bills and the cost of compensation up to a certain limit, as part of public liability and for professional indemnity cover. Some deals provide public liability protection as an optional extra, but virtually all forms of travel agent professional insurance should include an element of professional indemnity.
Professional indemnity insurance will pay out in the event you face a claim from a third party such as a client because they feel that something you have done has cost them money, typically being a mistake, allegation of act of negligence, or omission in your day to day work. Public liability insurance applies to people who work in the public domain and who may sometimes run the risk of a compensation claim due to personal injury. This can be relevant to those who run premises regularly visited by the public, such as a travel agent shop.
Policies typically pay for the cost of a legal defence and even any compensation which may be awarded against the policyholder up to certain limits. So a travel company might take out protection for as much as a million pounds worth of legal bills and compensation, for instance. This is just an example and the policyholder will need to choose a level which is appropriate to their business. A company with a handful of clients of a low profile will not normally need as much protection as a firm with hundreds of businesses on the books and a turnover in the millions of pounds.
Indemnity cover often also protects against a few other things, including allegations of defamation through libel and slander, unintentional infringement of intellectual property rights, and even claims that employees or directors of a company have acted dishonestly an defrauded a client.
Note that protection like this is not conditional on the complainant’s case being invalid. You will be covered whether or not what the other side is saying is true, but note that the typical policy requires that any mistake you have made is unintentional and not malicious, IE it was not done deliberately to harm the client.
Travel agent professional insurance can effectively work in the background of your business, providing a safety net to fall back on in the event you face what would otherwise be a financially damaging and extremely stressful legal challenge.
With all the usual overheads like utility bills, staff wages, stationery, and so on, a travel agent business can feel like there is enough cost involved already with setting up a business. But the right kind of cover is also important, particularly as it could save a business a considerable amount of money in the long run. A travel agent professional insurance policy with indemnity protection could one day help safeguard the future of the business in the right circumstances.
It is important because a company can be extremely vulnerable if it does not have a provision in place having been sued by a client. A straightforward mistake can lead to someone losing a considerable amount of time and money, which they may decide to recoup through legal means. This will mean having to pay for legal help to defend your case. Indemnity cover as part of a travel agent professional insurance policy would payout on this, meaning you potentially would not have to pay a penny out of your own business account.
In exchange for a regular premium the insurance company will guarantee to pay legal fees up to a set limit, which is agreed at the start or the policy and needs to be chosen by the business. It will normally protect a firm should it be accused of making a mistake, omission, or act of negligence during the normal conduct of the business. For example, you may be hired by a company to provide a short break for a group of its workers. If an error in preparations meant they were stranded away from home for a period, the company concerned could lose money. A legal action could follow, with the firm seeking to recover any profit it has lost as a result.
To sort this out a solicitor would be needed, then there might be legal hearings, complicated paper work to deal with and compensation may be awarded. Indemnity cover will in most cases even pay the cost of this, again subject to certain limits. A policy will also include a degree of public liability insurance as an optional extra or simply incorporated with the policy.
There are also things like protection for claims of breach of copyright or confidence, defamation, and the loss or damage of a client’s data or documents. A travel agency can also arrange for the protection to guard against any future claims which arrive which are historical, meaning they date back to before the travel agent professional insurance cover was first bought. This is often known as retroactive cover and is similar to run off cover, protecting a firm for a safety net period after it has stopped trading or decided to swap over to a new insurer.
Travelling abroad remains as popular in the UK as ever, thanks the continuing availability of cheap flights from an expanding number of UK airports. Although the majority of trips do go smoothly and without hindrance, sometimes things go wrong. Passengers may find they have been given the wrong flight times, their baggage may be lost in transit, or a hotel may turn out to not be all it is cracked up to be. In some circumstances the customer will rightly or wrongly blame a travel agent, and occasionally this can lead to a legal claim. Thankfully, travel agent professional insurance could help protect a business if such a circumstance does arise.
Travel agent professional insurance which includes professional indemnity cover helps guard against the risk of being sued by an unhappy customer. A legal letter through the post is never a pleasant thing to receive and it can be an expensive proposition depending on how far a claim gets – hiring a legal team to defend a particularly complicated action is never a cheap proposition.
The right insurance policy will pay out any legal costs which are incurred as a result, regardless of whether the case gets no further than one hearing or whether it goes all the way to the high court. If the customer is ultimately awarded compensation, the insurer will normally pay this out as well.
Of course, as with other types of insurance, there will be limits as to how much protection someone will be entitled and as to how much the insurer will pay out by way of compensation. This is normally set at the start of the policy and the policyholder is free to choose what level and therefore what premium they have.
Accordingly, there is also the risk of being under-insured if someone goes for a more stripped down policy which is not suitable for their needs. If a travel agent which has a limited number of clients chooses £50,000 worth of cover for example, then faces a legal claim costing £100,000 pounds to defend, they will have to meet the £50,000 difference – therefore it is vital to choose the correct policy.
Common extras which are included with this type of insurance include protection should a legal case arrive because an employee has committed an act of dishonesty. Other legal pitfalls like defamation, breach of copyright and breach of confidence will also usually be covered.
If a travel agent decides to stop trading or to change insurer, most companies will be able to provide an overrun or retroactive period of travel agent professional insurance cover to make sure cover still applies should a legal claim arrive which relates to an event which happened in the past – ie a complaint is made one month, but the actual legal challenge does not arrive until five months later.