April 20, 2022
As the federal government eases COVID-19 travel restrictions, making it easier for travellers to get insurance, travel agents can expect business to pick up again in the near future.
This month, fully vaccinated travellers no longer need to provide a pre-entry COVID-19 test result to enter Canada by air, land, or water. They may, however, be selected for mandatory random testing, according to a recent announcement from the Government of Canada. (1)
For brokers serving travel agents, now is a good time to check in on clients to ensure they have adequate professional liability coverage. While some host agencies allow their independent contractors to be covered under their E&O policy, others require independent contractors to obtain their own.
What Could Go Wrong
When considering the insurance risks facing independent contractors, the term moral hazard is important. “Moral hazard” is based on the idea that insured parties will take more risks knowing their insurers will protect them against losses. For example, a car owner with theft insurance will become less vigilant about where they park, a salaried employee will tend to take longer breaks, and so on.
In the travel industry, a travel agency might accidentally quote a client $3,000 for a trip that really costs $4,000. The travel agent might overlook the mistake, because it means their client is booked and happy that they’re saving $1,000. However, insurance companies will call this a moral hazard and will not foot the bill.
Aside from cases of moral hazard, there are some mishaps that are completely unpredictable and leave both the travel agent and the client unhappy and at a loss, and the client decides to sue. In situations like this, an insurance provider will likely cover the cost.
For example, suppose the agent books a client for a cruise out of the UK. The agent tells the client they will not need any special visas. But when their flight is delayed, the client misses the cruise ship and has to catch up with it at the next port, in Spain, which requires a special visa. They end up missing half of their cruise while things are straightened out and sues the travel agent for the cost of their trip. Since in this situation the travel agent could not predict the flight delay, it does not fall under moral hazard and would likely be covered by the insurance provider.
Do All Travel Agents Need PL Insurance?
In Canada, some, though not all, provinces have legislation requiring an agency to carry E&O insurance. While not be required by law everywhere, travel agents may be in other situations that require E&O insurance. For instance, members of the Association of Canadian Travel Agents (ACTA) must have E&O insurance if they live in a non-regulated province. In addition, some host agencies require proof of E&O insurance before an independent contractor or agency can join.
What’s Covered with SWG PL: Miscellaneous Professional Liability
SWG PL - Miscellaneous Professional Liability insurance offers a packaged E&O and CGL policy that covers a wide range of classes of business. Tailored E&O coverage protects small to large firms from a broad range of miscellaneous risks. SWG provides a Miscellaneous PL policy at competitive rates, bringing extensive knowledge and underwriting experience in professional liability.
Including but not limited to the list below. Contact us if you don’t see what you’re looking for.
● Accountants, Bookkeepers, and Tax Preparation
● Business Consultants
● Collection Agencies
● Travel Agents
● Employment Agencies
● Event Planners
● Interior Designers
● Leasing Agents
● Management Consultants
● Utility Locators
● Paralegal Offices
● Occupational Health and Safety Consultants
● And many more
For more information, visit our product page at https://swgins.com/product/miscellaneous.html
Content is current as of the date of broadcast and is subject to change without notice.