If you're in the business of providing tours, then you need to have insurance. It's that simple. But not all insurance is created equal, and there are a few specific types that are essential for tour operators.
In this blog post, we'll discuss the six most important types of insurance, and we'll explain why each one is important. So if you're looking to start a tour company or you're just curious about what type of insurance you should be carrying, read on!
What kind of insurance do tour operators need?
Thinking about starting a tour business? Well, you may have heard that insurance is essential, but what type of policy do you need? Let us unravel the mystery for you.
Every tour operator business has unique needs that should be taken into account when selecting an insurance policy. But there are some general types of coverage you'll want to make sure you have.
Deciding which one, however, is up to you and your provider. To help you, ask yourself:
What possible risks may arise and how can I best prepare to protect against them?
Anticipate potential risks that could emerge to be prepared for any possible outcomes. For example:
- Who covers the risk of property damage, liability, or other risks associated with taking people on tours?
- What if a customer breaks his leg on your zipline tours or gets food poisoning from your restaurant tour? Who will cover the emergency medical costs?
- What happens if one of your tour guides gets injured while leading the tour or gets COVID-19?
Knowing the answers to these questions is crucial for making sure your tour business is properly covered.
Furthermore, each country may have unique requirements depending on the tour activities you offer. So be sure to research your options and make an informed decision about the kind of coverage that best suits your needs, even small businesses.
Now that you know why insurance is important to protect your business, let's take a look at what type of policies you should consider.
6 Types of Insurance for Tour Operators
1. General/business liability insurance
Without a doubt, tour businesses must acquire this type of insurance for their protection. It covers legal costs if someone sues your business for personal injury, bodily injury, property damage, slander and libel, copyright infringement, and more.
For example, your tour driver could get into an accident that damages property or injures someone. If that happens, then general liability insurance will help cover the costs associated with the damages.
Without this one, you're putting your business in a precarious position.
2. Professional liability insurance
Also known as Errors and Omissions (E&O) liability insurance, this type of policy protects you against the risk of being sued for negligence.
For instance, if a customer on your tour gets food poisoning from a restaurant you recommended, then your business can be held liable for not providing accurate information. This will help cover the costs like medical bills of any legal action.
3. Commercial property insurance
It doesn't matter where your business is located, property insurance should be considered a must-have. This third party property policy will help protect your physical assets from risks such as fire, theft, floods, and other natural disasters.
For example, if you operate by the beach, then you should probably invest in property insurance with coastal coverage.
4. Auto/transportation insurance
If your tour operator business involves transportation (for example, a bus tour), then you must have auto insurance. This will cover any expenses related to the vehicle in case of an accident of your employees and clients.
For instance, your paddle-boarding tours require a truck to transport the equipment. If the driver gets into an accident while on tour, then this will help cover the damages.
Also, when you have this type of insurance, any employee may drive. This will allow you to rest assured that your staff is covered in case of an emergency.
5. Cyber liability insurance
This type of liability insurance protects businesses from cyber attacks and other digital risks.
For example, if a hacker steals confidential customer data from your website or an employee accidentally sends sensitive payment information to the wrong person, then this will help cover the costs associated with recovering the data and restoring your reputation.
6. Business interruption insurance
This policy will help secure your business from any unforeseen circumstances that could lead to a risk of financial loss.
For example, if your tour company is forced to temporarily close due to the COVID-19 pandemic, then this insurance will help cover the expenses incurred while your business is closed.
Tour businesses with a business interruption policy were able to recoup their customer refunds due to pandemic-related closures and cancellations thanks to the protection provided by their companies.
Additional best practices for protecting your business
In addition to the six types of insurance discussed above, there are other steps you can take to protect your business.
- Make sure all employees have the proper training and certifications.
- Keep up with safety regulations, such as regular vehicle maintenance checks or pest control services.
- Understand the laws and regulations that apply to your industry.
- Create a crisis response plan and review it regularly.
- Stay ahead of the competition by monitoring their activities and trends in the industry.
Having a cancellation policy is also a must-have. This should even be readily available on your website so customers know what to expect in case they need to cancel their tour. Your terms should be clear and concise, leaving no room for misinterpretation.
Finally, ensure you have emergency medical plans in place. For instance, if your tours are based in places where hurricanes or tropical storms are common, have a plan in place to evacuate quickly and safely.
Frequently Asked Questions
How much does tour operator insurance cost?
The cost of insurance will vary depending on the type and amount of coverage needed. Generally, the more coverage you have, the higher your premium will be to protect your business.
How much is liability insurance for tour operator?
Liability insurance typically ranges from hundreds to thousands of dollars, depending on the type and amount of coverage needed.
Do tour guides and travel agents need insurance?
Yes, most travel agents and tour guides should have the appropriate insurance to protect themselves and their customers from liabilities and financial losses. Insurance can also provide peace of mind for both the tour guide and their customers.
Final Takeaways
Having the right insurance is an essential part of running a successful tour business.
With this comprehensive guide, you should now have a better understanding of the different types of insurance tour businesses need and how they can protect their business from liabilities and financial losses.
