5 types of tour operator insurance and what to consider

Updated November 2021 – As a tour operator, you will be dealing with risks on a daily basis. On top of the typical risks that businesses face, you also face additional risks unique to the tour industry. Protecting your business with specific tour operator insurance will ensure you cover all your bases.

For example, what happens if you have to cancel your tours due to weather or insufficient numbers? or when a customer gets hurt while participating in your tour? These situations may vary in their rarity but the financial damages from these risks are always significant. Luckily, there are many types of insurance plans available to protect tour operators against risks.

With Bob’s Hypothetical Kayaking Tours as an example, we will cover the 5 most important insurance plans your tour needs.

1. Asset & revenue insurance

While the specifics will vary depending on the nature of your tour or activity, you’ll need to consider all areas. This refers to things like:

  • Breakdown and damage of business assets (for example fires, burglary, general property, equipment breakdown). All Australian businesses have to ensure company vehicles for third-party injury liability. Your equipment and property investments are at great risk if you don’t insure them. TIP: Make sure to check your own federal or state laws to see what is legally required!
  • Business interruption (any interruption to the business which stops the business from making money). This includes interruption through a key person’s illness or bad weather.

If Bob’s Kayaking office was to catch fire and nearly everything was destroyed, Bob would lose money on bookings that would have to be canceled, rent that still needed to be paid, wages that are still payable to his staff, and all of the other regular expenses. A claim on asset & revenue insurance will pay for the expenses of the business while they are unable to operate due to an insurable loss.

2. Public liability insurance

Let’s say Bob can’t catch a break and one of his tour participants loses their phone, laptop, jewelry, and glasses while having the time of their life on his exhilarating kayaking experiences. Public liability insurance will free Bob from any responsibility of paying back the stolen/lost items. Tip: Learn how to write a liability release form here!

While public liability insurance is a very costly form of tour operator insurance (the standard cover is $10M), most agents will refuse to resell your tour unless your tour has one. Remember that if you work with a third-party contractor, you need to make sure that they have public liability insurance in place as well.

3. Workers compensation insurance

tour operator insurance tips

Bob can’t manage his kayak operation all by himself! He needs accountants to manage his numbers, tour leaders to run the tours, and maintenance staff to take care of the kayaks. Many tours, such as Bob’s, involve a lot of physical activity on a daily basis. Even employees who work in Bob’s Kayaking office can trip on a cord and hurt themselves.

By having workers compensation insurance in place, you’re protecting your business against costly compensation claims as a result of a workplace accident or illness. Workers compensation has to be taken out for all employees of a Pty Ltd company, including company directors and business owners.

However, business owners aren’t covered by workers compensation if they are a sole trader or a partnership. In this case, you can opt for income protection in the case of accidents and illnesses so you don’t lose revenue while you recover.

4. Commercial Crime Insurance 

As much as Bob values all his staff and employees, sometimes there’s going to be a bad egg. This may be shocking, but theft and misdeed by employees are actually more common than you may think it is. A report published by Embroker states that a shocking 75% of employees admit to stealing at least once from their employers. It is for this reason that Bob should have commercial crime insurance in place as one of his tour operator insurances.

In the event of theft or misdeeds actioned by one of Bob’s staff, commercial crime insurance will cover any losses. This can include missing assets or money misspent on non-work-related purchases

5. Errors and Omissions Insurance

Running a kayak business is very demanding and Bob deals with a variety of customers every day. Making mistakes is inevitable, however, certain hiccups can result in severe damages and ruin Bob’s business reputation. Not only that, but the time spent on recovering and fixing a mistake is time-consuming. 

Errors & Omission Insurance (EOI) will protect Bob’s business from claims that may arise due to mistakes or failure to meet certain criteria of a signed contract. With an E&O Insurance in place, Bob will be covered for any financial losses from the result of errors and omissions. E&O Insurance also covers Bob from any settlement or additional costs related to the mistakes that may arise.

In most cases, EOI is often one of the required forms of business insurance many organizations will need to have in place. This tour operator insurance cost is highly recommended to protect your tour operator business from inevitable human errors.

Where to look for Tourism Insurance

With the 5 types of tour operator insurance covered above, it’s important to do your research prior to signing up with an insurance company. Without the right level of cover, you may be out of pocket after a claim. So it’s critical that you choose the correct tour operator insurance plan and an insurance company that fits well with your tour operator business. 

You can begin your search by:

  • Getting quotes from those specializing in tourism insurance
  • Asking others in the industry for recommendations
  • Contacting your local tourism organization and ask them for recommendations

Once you’ve gathered this information, pick your top three companies from the list and compare their offerings. It’s important to find a policy that’s right for your business, so make sure to do proper research and shop around instead of jumping signing up with the first tour operator insurance company you see.

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