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How to: Choose the right insurance protection

As recent cases involving Thomas Cook and Inghams show, having the right protection insurance is crucial.


Independent travel agencies and tour operators should make sure they have the correct insurance in place to protect businesses for a number of different risk scenarios.


Here are the main types of insurance available.


 


Scheduled airline failure insurance (SAFI)


Recommended for: Travel firms need this insurance because of the current financial fragility of the airline world and the general diminished confidence of consumers in scheduled airlines.


With cover in place, travel agents can sell scheduled airline tickets in the knowledge that their clients will be reimbursed should the airline fail. This can be a positive sales message.


What it covers: This cover protects flight tickets bought with scheduled airlines.


What it costs: The cost of Safi is determined by the creditworthiness of the scheduled airlines you do business with and the value of the annual ticket sales with those airlines.


 


Tour operator’s liability cover


Recommended for: Any travel company that organises arrangements as defined by the Package Travel Regulations and EU directives.


What it covers: If, for example, you arrange travel services and one of your customers is injured while travelling, they have the right to seek compensation from you as the travel organiser.


This insurance provides protection for your business in this scenario. It is essential, as you don’t want to end up liable for a potentially large compensation claim as a result of the actions of your employees, agents or suppliers.


What it costs: Depending on previous claims history, this cover would cost in the region of £12,500 for a tour organiser with an annual turnover of about £15 million.


 


Professional indemnity cover


Recommended for: Any travel business.


What it covers: This insurance covers you for circumstances such as a customer holding you liable for incorrect advice. For example, if a member of your staff advised a client that they didn’t require a visa, when they did, resulting in the client being unable to complete their travel arrangements.


Or if you failed to refer a client with a serious pre-existing medical condition to a medical helpline to confirm cover, resulting in the client travelling without adequate insurance and subsequently having a claim declined.


What it costs: The cost of this is usually included as part of the tour operator’s liability cover (see above) or can be arranged as a separate policy starting from about £250 a year.


 


Travel insurance / staff schemes


Recommended for: Travel agents. As well as offering insurance cover to your customers for their holidays, you also need to provide it for all agency staff who may travel abroad for work.


What it covers: All the usual travel insurance cover is required for your staff, such as medical cover, cancellation and curtailment, and baggage cover, including items such as laptops.


What it costs: It usually depends on what commercial agreement you have in place with your travel insurance provider, but usually the premiums are much reduced for staff cover.


 


Steve Nickerson, manager director, Preferential InsuranceSteve Nickerson is manager director of Preferential Insurance

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