Which Tour Operator Insurance Is Right for You?

Create the ideal insurance plan for your tour or activity business with this essential guide on all things insurance – from liability and property damage to all of the steps you need to take to create the optimate insurance plan for your operation

Every tour operator and guide who’s been at it for a while has their fair share of horror stories. Guests getting injured or sick or worse on tour. Bus breakdowns, accidents or near-misses. In the course of my tour guide career I have already met almost all four horsemen of the apocalypse: (wild) Fire, Flood (and hurricane and blizzard), and of course Pestilence (running a multi-day tour in mid-March 2020 with the coronavirus closing everything behind us). At least I’m still alive: despite many questionable choices in the name of adventure, Death hasn’t caught up with me yet.

Embarking on the journey of running a tour, activity, or attractions company in the travel industry is an exhilarating one, offering unique experiences to travelers. However, the thrill comes hand in hand with a set of risks and uncertainties that can potentially jeopardize the smooth operation of your business. Your safety net — or parachute — in this adventure is none other than a well-crafted tour operator insurance plan.

In this guide, we will navigate through the many considerations of finding the right tour operator business insurance, and understanding the key coverage options essential for the protection of large and small businesses such as tour companies, activity suppliers, visitor attractions and other operators in the in-destination experiences sector. 

Don’t wait until the worst case scenario happens or the four horsemen of the apocalypse are bearing down on you and you’re finding cover to realize you have a dreaded gap in your coverage: prepare now to ensure you have the right insurance coverage in place!

Why Tour Operators Need Specialized Insurance

Let’s start by unraveling the significance of insurance in the context of the travel industry. Insurance plays a pivotal role in providing a safety net against unforeseen events that could lead to substantial financial losses. 

For tour operators, the risks are unique and multifaceted, ranging from accidents and bodily injuries during tours to cancellations, weather-related incidents, property damage, even cyber liability. Managing these risks necessitates a specialized approach to insurance to ensure you have the right coverage when you need it. 

Distinct from regular travel insurance, which primarily focuses on the needs of the traveler, or general business insurance, which tends to use a one-size-fits-all approach, the right insurance for tour operators should be tailored to address the specific challenges, needs and circumstances faced by those designing and delivering a myriad of unique, immersive and Instagram-worthy experiences.

Key Coverage Options for Tour Operators

1. Liability Insurance 

Think of general liability insurance as the bedrock of your business protection. It shields you from potential lawsuits or claims made by clients in the event of accidents during a tour. Whether it’s bodily injury or property damage, this coverage is your financial safety net, ensuring you can navigate legal complexities and potential settlements without jeopardizing your business.

Imagine a scenario where a guest sustains an injury during one of your adventures. Tour operator liability insurance steps in, shouldering the financial burden of legal proceedings and potential compensation. General liability insurance is the security blanket that allows your business to weather unforeseen storms and continue thriving.

2. Property Damage Coverage

Property damage coverage comes into play when unexpected events like natural disasters, theft, or vandalism impact the property owned or rented by your tour company. This isn’t just about protecting physical assets; it extends to ensuring the uninterrupted flow of your business operations in the face of property-related incidents.

Picture a scenario where your tour office faces damage from a fire, rendering it temporarily unusable. Property damage coverage becomes your financial ally, mitigating the repercussions and allowing your business to recover and continue operations without facing severe financial setbacks.

3. Business Interruption Insurance

In the ever-changing landscape of the travel industry, business interruption insurance stands as a flexible shield. It provides financial support when your business is temporarily unable to operate due to unforeseen circumstances like pandemics, natural disasters, or political unrest.

Consider the impact of a sudden government-imposed lockdown due to a pandemic. A lot of small businesses in particular struggled a great deal under these restrictions. Managing your insurance program can be a considerable challenge under these circumstances, and business interruption insurance becomes your financial lifeline when cancellation rates go through the roof, covering ongoing expenses and lost income during the closure. It’s the buffer that ensures your business remains financially stable and ready to resume operations when conditions improve.

4. Commercial Auto Insurance

If your tours involve the use of vehicles, such as buses, vans or jeeps, commercial auto insurance is non-negotiable. It goes beyond personal auto insurance, offering protection specific to the commercial use of vehicles within your business operations.

Envision a scenario where one of your tour vehicles is involved in an accident during a guided tour. Without adequate commercial auto insurance, the financial ramifications could be immense. This coverage ensures that your vehicles, drivers, and clients are protected, allowing your business to continue delivering exceptional experiences without unnecessary disruptions.

5. Worker’s Compensation

Your team’s well-being should be paramount. Workers compensation is crucial, especially for roles like tour guides who are exposed to a variety of potential risks during tours. This coverage provides financial support for employees in the event of injuries or illnesses directly related to their work.

Imagine a situation where a tour guide sustains an injury while leading a group through challenging terrain. Workers compensation ensures that medical expenses and lost wages are covered, allowing the injured employee to focus on recovery without facing financial strain. This not only safeguards your employees but also contributes to the overall well-being of your business.

6. Errors and Omissions Insurance

In addition to general liability insurance, errors and omissions insurance, often known as professional liability insurance, is your shield against claims arising from alleged negligence, omissions or mistakes. This professional liability coverage is particularly relevant in scenarios involving misinformation about tour details, incorrect bookings, or oversights in service provision.

Consider a scenario where a guest claims they received incorrect information about the accessibility features during a guided tour, and is unable to join or complete the tour. Without errors and omissions insurance, the financial burden of legal defense and potential settlements could be substantial. This coverage ensures your business is safeguarded against claims related to professional liability, such as unintentional errors and omissions in your tour descriptions and guest communications, allowing you to focus on delivering exceptional experiences with confidence.

7: Commercial Crime Insurance

It’s hard to think that someone inside your organization would ever do anything dishonest.  However, you may find it shocking just how often this happens. There are many conditions that can lead to an incident but anytime an employee has access to bookkeeping, bank accounts, credit cards, etc., there is potential for a damaging incident to your business. In addition to general liability and professional liability insurance, this coverage protects against fraud, theft, or other criminal acts that could potentially cripple the financial stability of your business.

Picture a scenario where an employee engages in fraudulent activities, embezzling funds from your tour company. Commercial crime insurance becomes the shield that guards your business against financial losses resulting from such criminal acts. By understanding and addressing potential risks associated with commercial crimes, you can fortify the resilience of your business against external — and internal — threats.

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Factors to Consider When Choosing Insurance Coverage

First of all, you do not need to become an expert in all things insurance. There are two key components to choosing your insurance coverage: your insurance advisor, agent or broker, and the insurance carrier or underwriter. For operators of tours, activities and attractions, finding a reliable insurance advisor to work with, ideally one who is familiar with the nuances of the travel industry, is an important first step.

This advisor should help you navigate through the following steps of assessing the risks your business faces, finding the best policy tailored to your business for the best price, and ensuring there aren’t exclusions and limitations in the policy that leave you uncovered in the event of a claim.

1. Reputation of the Insurance Provider

Choosing a reputable and well-regarded insurance advisor is crucial for the success of your insurance program. The reliability of your insurance agent can impact the efficiency of claims processing, the clarity of policy terms, and the overall experience of managing your insurance program.

Research potential partners thoroughly, checking reviews, ratings, and past claim experiences. Ask how many clients they work with that have similar operations as you. Reach out to other businesses in the tours, activities and attractions sector for recommendations and insights on who they have worked with. A reputable insurance provider not only offers financial protection but also provides peace of mind, knowing that your business is in capable hands when it comes to risk management.

2. Assessment of Business Risks

Your insurance advisor should help you understand the specific risks your business faces, and ensure your policy is tailored to provide effective insurance coverage based on the unique challenges inherent to your business. This assessment takes into account factors such as geographical location, types of tours offered, and the scale of operations — small businesses may have different needs than larger ones. 

For instance, if your tours involve water or aerial activities, the risk profile will differ significantly from a company specializing in historical walking tours. By understanding and analyzing these risks, your insurance agent should guide you to make informed decisions about the types and levels of coverage needed to safeguard your business effectively.

3. Budget and Premium Costs

How much does tour operator insurance cost? This can vary depending on your specific needs and requirements. While comprehensive coverage is crucial, it’s equally important to balance coverage needs with budget constraints. No one wants to pay any more money for insurance than they must. Your insurance agent should help you to evaluate insurance quotes carefully, considering both coverage and premium costs. Recognize that under-insuring could leave your business vulnerable, while over-insuring may strain your budget unnecessarily.

Explore different tour insurance coverage options and discuss your budgetary constraints with your insurance agent to find a balance that meets your financial capabilities without compromising the effectiveness of your coverage. Remember, the goal is to ensure adequate protection for your business without unnecessary financial strain.

4. Policy Exclusions and Limitations

One of the reasons it’s so important to work with an insurance agent familiar with tourism operator insurance is so they can ensure your policy covers what you need it to. The last time you want to find out your parachute has holes in it is when the plane is going down! A thorough understanding of what is not covered under your policy is as important as understanding what is covered. Policies often come with exclusions and limitations that may impact the effectiveness of your coverage. 

For instance, some policies may have exclusions related to specific types of activities or events, or to specific locations. If you add a new tour type that involves a mountain biking component, does your current operator insurance cover that? If you’re a U.S.-based tour company operating primarily in Florida, does your policy include tours to Puerto Rico or the U.S. Virgin Islands? 

For this reason, it’s imperative that your advisor understands your business, knows the insurance market and has relationships with the limited number of carriers that will underwrite your unique business, and you can trust to make sure is able to design and provide an adequate parachute. You should be able to fully trust that your insurance advisor is acting in your best interest and making sure you are getting appropriate coverage at a fair price.

How to Ensure Comprehensive Coverage for Your Business: Introducing Arival ProShield

Navigating the complexities of insurance for tour operators is paramount for the sustained success of your business. From professional liability to business interruption, from bodily injury to cyber liability, there are so many factors to consider. But proper, flexible, customized insurance can be notoriously difficult for tour and activity operators to find. 

For a while now, Arival has been working behind the scenes on a way to help operators in our industry struggling with insurance challenges. Recently, we launched Arival ProShield for U.S. operators, a comprehensive insurance product specifically tailored for tour, activity, and attractions businesses, offered in partnership with Granite Insurance. Learn more about this insurance product, available exclusively to Arival Insider Pro Access members, here.

Chris Murray from Granite Insurance explains the Arival ProShield insurance product tailored for tour, activity, attraction and experience operators.

As you embark on this journey of finding and choosing the right insurance coverage, consider the key takeaways: partner with a reliable insurance provider, understand your risks, and choose comprehensive coverage that’s tailored for your specific needs. 

Or in other words, whatever you do and whoever you do it with, remember: always use protection.

Photo credits: Pexels / Quang Nguyen Vinh, Pixabay, Mati Mango, Tim Mossholder, Arthouse Studio, Vika Glitter, Vlad Deep, APG Graphics, Greg Rosenke.

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