E&O is an abbreviation for “errors and omissions.” E&O insurance is professional liability insurance that protects companies and their employees from costly mistakes and lawsuits that may stem from the professional services they provide. Basically, anyone who provides a service to a client for a fee – like insurance brokers, financial planners, lawyers – should have E&O coverage. Travel agents, whether you have your own credentials, book though a host agency, or work for a travel agency, need E&O insurance.
Now, there is no law that says you have to have E&O insurance. It’s not like driving a car, where in some states the DMV won’t give you a license without proof of insurance. But it would be reckless to sell travel without E&O insurance. Why? Because everyone makes mistakes, and in the travel business those mistakes could be extremely costly.
E&O insurance isn’t there to cover every little thing that might go wrong. Let’s face it, things happen, corrections need to be made, and sometimes there’s a cost to correcting the problem. That’s just part of doing business. E&O insurance is for when BIG things go wrong. Like getting the date wrong on a destination wedding booking. You may think, “I would never do that!” And, mostly likely you wouldn’t. But no one is perfect. Anyone, no matter how diligent, can make a mistake. Also, as a travel agent you are in a service business, so you run the risk that a dissatisfied client may sue you (whether warranted or not). It’s not a big problem in travel – we aren’t taking about medical malpractice! In fact, E&O claims in the travel business are pretty rare. The purpose of E&O insurance is to minimize your financial risk to the deductible on the policy.
E&O insurance is not a travel-industry-specific type of policy; that said, there are insurance companies who specialize in E&O coverage for travel professionals. It makes sense to work with those companies because there is no standard E&O coverage terms so you should be sure that the policy you have is written to cover the risks that most pertain to you as a travel professional. They may also offer optional riders that are geared toward the type of business that you do. (For example, they may cover you for inadvertent copyright infringement for mistakenly using an image without permission on social media.)
You may be covered under your host agency’s policy. If that is the case, be sure that you review the policy and that you are satisfied with the level of coverage. If not, get your own policy. It’s worth the expense. Also, if you do any business outside of your host agency, you would not be covered for those bookings so you will need your own policy. If you have sub-agents, they wouldn’t be covered either unless they have an independent contractor agreement with the host themselves.
If you aren’t sure what your host agency offers in terms of E&O coverage, ask. They can explain the policy coverage to you and give you a copy of the policy. If you aren’t sure how much coverage you need, contact the E&O insurance providers like Berkshire Hathaway and Berkeley Group that have travel agent-specific policies. They will ask you specific questions about your business, recommend the level of coverage that you need, and provide a quote.
Like any other insurance, hopefully you will never actually need to make a claim on your E&O policy. But it’s absolutely worth the premium to be covered just in case.