5 types of tour guide insurance all tour operator businesses need

As a tour operator, you face risks on a daily basis that go beyond typical business challenges. Whether you’re running sightseeing tours in Sydney, 4WD tours in the Outback or kayaking adventures along the coast, it’s vital to protect your company with specialized insurance.

For example, what happens if you have to cancel tours due to bad weather, natural disasters, or insufficient bookings? Or if a client suffers a personal injury during your tour? While these situations vary in frequency, the potential financial damages are always significant. Fortunately, there are a number of insurance solutions available to help protect tour operators against these risks.

Using Bob’s Hypothetical Kayaking Tours as an example, let’s explore the 5 most important types of insurance your tour operator business needs, along with some additional considerations for the Australian market.

1. Asset and revenue insurance

The specifics of this coverage will depend on your tour or activity type, but you’ll need to consider all areas:

• Protection against breakdown and damage to business assets (e.g. fire, burglary, general property, equipment breakdown). Keep in mind that all Australian businesses are required to insure company vehicles for third party liability. Without insurance, your equipment and property investments are at considerable risk. Pro tip: check your state or federal legislation to see what’s required by law!

• Business interruption coverage (for any interruption that stops the business from generating revenue). This includes interruptions due to a key person’s illness or bad weather.

If Bob’s Kayaking office caught fire, destroying nearly everything, he’d lose money on canceled bookings, still need to pay rent and staff wages, and cover other regular expenses. A claim on asset & revenue insurance would cover these business expenses during the period they’re 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 cell phone, laptop, jewelry and glasses while having the time of their lives on his exhilarating kayaking adventures. Bob’s liability insurance will relieve him of any responsibility to replace the stolen/lost items.

While liability insurance is expensive (standard coverage is often $10 million), most travel agents won’t resell your tour without it. Remember, if you work with third party contractors, make sure they have their own liability insurance as well.

3. Workers compensation insurance

Bob can’t run his kayak operation by himself! He needs accountants to handle his financials, guides to lead the tours, and maintenance staff to take care of the kayaks. Many tours like Bob’s involve a lot of physical activity on a daily basis. Even employees who work in the Bob’s Kayaking office can trip on a cord and get hurt.

Workers compensation insurance protects your business against costly claims resulting from workplace accidents or illnesses. It’s mandatory for all employees of a Pty Ltd company in Australia, including company directors and business owners.

For sole traders or partnerships, business owners aren’t covered by workers’ compensation. In these cases, you should consider income protection insurance to avoid losing revenue while recovering from an accident or illness.

4. Commercial crime insurance

As much as Bob values all of his staff and employees, sometimes there’s going to be a bad egg. This may come as a shock, but employee theft and misconduct are more common than you might think. According to a report published by Embroker, a staggering 75% of employees admit to stealing from their company at least once. It is for this reason that Bob should have commercial crime insurance as one of his tour operator insurances.

In the event of theft or misconduct by one of Bob’s employees, commercial crime insurance will cover all losses. This could 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 wide variety of customers every day. Making mistakes is inevitable, but certain hiccups can cause serious damage and ruin Bob’s business reputation. Not only that, but identifying and correcting a mistake takes a lot of time that could be better spent elsewhere.

Errors & omissions insurance (E&O) will protect Bob’s business from claims that may arise due to mistakes or failure to meet certain criteria of a signed contract. E&O insurance also protects Bob from any settlements or additional costs related to the errors that may occur. This coverage is often required and highly recommended to protect your tour operator business from inevitable human errors.

Additional considerations for Australian tour operators

While the above five types form the core of a solid insurance package, savvy Australian tour operators should also consider:

Professional indemnity insurance

Often bundled with public liability insurance, this covers legal fees and settlements arising from providing incorrect advice or information. For example, if Bob gives inaccurate information about a kayaking route’s difficulty, leading to an unprepared guest, this insurance would cover potential legal consequences.

Vehicle and transport insurance

For tour operators who transport passengers by bus, boat or 4WD, specialized vehicle insurance is essential. It goes beyond standard car insurance to cover the unique risks associated with transporting passengers for commercial purposes. This is particularly important for operators running sightseeing tours in remote areas of Australia.

Cyber liability insurance

In an age where bookings and customer data are increasingly digital, cyber liability insurance protects against data breaches and cyber attacks. This is increasingly important for tour operators and other travel industry professionals who rely on online booking systems and store customer information digitally.

Product liability insurance

If you sell or rent equipment as part of your tours, product liability insurance covers you against claims for injury or damage caused by products you’ve supplied. This could be particularly relevant for operators offering activities such as kayaking, snorkeling or hiking where equipment is provided.

Where to look for tourism insurance

With the 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:

• Get quotes from insurance brokers specialized in tourism industry coverage.

• Ask for recommendations from other tour operators or local tourism organizations.

• Considering working with an insurance broker who understands the unique needs of tour operators and can help tailor a policy to your specific business model.

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.

Whether you’re a small business just starting out or an established travel company, the right insurance coverage gives you the confidence to deliver amazing experiences without constant worry. It allows you to focus on creating unforgettable adventures for your guests, knowing that you’re protected against various risks.

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