Miscellaneous Professional Liability: Travel Agent Protection
A statement of the obvious: professional liability involves claims against professionals. What professionals? Attorneys, accountants, architects, financial advisers and others who may purchase a professional malpractice insurance policy offered by various insurers. But what about the dozens of other classes of professionals who may not have an insurance product dedicated to them? That’s where miscellaneous professional liability kicks in. Today, we’ll focus on travel agents as an example of the types of exposure facing a “miscellaneous” professional.
As vacation season winds down, the number of claims will likely grow against travel agents. The travel agent, is considered the legal agent of the travel service provider for the product that is sold, be it a vacation, cruise, or resort stay. A principal can be a cruise line, a vacation package, or a resort.
Just as in standard agency law, the agent’s authority is limited by the scope of the agency agreement with the principal, and agents that act outside their scope of authority do not have their actions imputed back to the principal. However, the recent growing trend is for courts to find that agents owe a fiduciary duty to the customer, that is, the travel agent is the legal agent of the customer, as well as being the legal agent of the travel provider. This dual agency status has continued to grow as travel agencies have relied less and less on the business customer and more on the leisure market.
Generally, a U.S. travel agent is liable for injuries caused to a traveler if the agent did not act with due diligence in investigating the safety of the travel provider that is acting as its principal. Potential travelers in the leisure market (as opposed to business travelers) rely on the travel agent’s expertise and special knowledge of the cruise ship or resort that they are booking. In this situation there is a higher standard of care owed by the travel agent to the customer.
Here are some tips for travel agents:
Don’t fly solo. Remember your relationship with your principals, and make it work for you. Advise your client of the principal to whom you report – this could avoid or minimize your liability for breaches of contract by the principal. A written notice, based on a template like this, could be helpful.
Journey the jurisdictional jungle. There are no federal laws pertaining specifically to travel agents, and among the states, there is a significant amount of divergence in the law and regulations pertaining to this industry, as well as the penalties for violating same. Check out the laws in every jurisdiction in which you do business or advertise, particularly because the states’ requirements are often contradictory or duplicative.
Pilot additional protection. Travel agent professional liability coverage is a form of E&O insurance aimed at protecting you both legally and financially if you are alleged to have made professional mistakes that bring physical harm to your customers (i.e. the bus tour in Provence you arranged gets into a fender bender), or that cause them financial losses (the Santorini resort you arranged cancelled your client’s reservation). Travel agents, like all professionals, must be aware of the types of insurance products available to them as part of their risk management protocol.