Companies that offer professional services such as consultancy, travel, and legal services are at risk of lawsuits from dissatisfied clients. For instance, if a physician prescribes medications that harm a patient, the victim can file a lawsuit against the named doctor. Travel agents are not exempted from such lawsuits considering the hiccups that occur before, during, and after trips. Thankfully, such businesses can protect their finances from professional liability claims by having the right E&O insurance coverage. Here is a look at the fundamentals of E&O insurance for travel agents.
Abbreviated as E&O, errors and omissions insurance is a policy that provides coverage against professional mistakes that cause loss, pain, and inconvenience to a client. If, say, a client sues you for unsatisfactory services, E&O insurance will pay for the costs of defense and compensation, saving your business finances. This policy is also known as professional liability insurance.
As mentioned earlier, travel agents are as vulnerable to professional mistakes as other service providers are. To give you an idea, in 2020 alone, clients lodged a staggering 102,550 complaints to the U.S. Department of Transport. These complaints were against airlines and travel agencies, and they mostly involved refunds. Refunds may seem like minor issues that a travel agency can handle. However, travel agencies can experience more serious problems, such as their client dying in a hotel room. Any problem, big or small, will jeopardize your finances as a travel agent, which is why you need E&O insurance. In addition, professional liability risks are often unforeseen, meaning you need to be prepared just in case your business lands in trouble.
Like any other insurance coverage, E&O insurance does not provide coverage for everything. In most cases, your coverage depends on the stipulations in your insurance policy. For instance, while some insurance companies may provide coverage for debit memos, others won't. Typical exclusions from E&O insurance for travel agents include:
The cost of E&O insurance is $25.67 and $33.17 per month for small travel agents and large travel corporations, respectively. The actual cost depends on factors such as the amount of coverage, insurance provider, and state of residence. You can also lower the premiums for your errors and omissions insurance coverage by mitigating the risks in your travel agency. For example, by formulating better trip cancellation policies, you can reduce or eliminate the losses that may occur due to canceled bookings. Specifically, you can transfer the cancellation cost to the client, which may help reduce the number of cancellations.
When you are in the market for professional liability insurance, call the reputable agents at CF&P Insurance Brokers. Our experts understand the importance of protecting your business and its assets. We also understand the complexities involved in insuring you against potential mistakes and errors related to your professional services. Schedule a consultation with one of our experienced agents, and you will get the answers you need.
