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Travel agent or tour operator? Why it matters for your insurance


Got the right travel agent or tour operator insurance? Then relax.

For travel agents and tour operators, summer is about anything but relaxing in the sun.

If you're good at what you do, business should be booming.

Contrary to popular belief, 'travel agent' and 'tour operator' aren't just interchangeable terms for someone who sells holidays.

Most standard professional indemnity policies (ours included) will cover travel agents, but specifically exclude tour operators. Tour operators usually have to go to a specialist broker or insurer to get cover.

There's a lot of crossover between the services tour operators and travel agents offer. Truthfully, we've had several customers unsure which they are.

Insurers and brokers have specific definitions for travel agents and tour operators. You might call yourself a travel agent, but if your business activities match their definition of a tour operator, that's what your broker will notice.

So which one are you? Travel agent or tour operator? It matters because, either way, your cover has to be right.

Travel agent or tour operator: what's the difference?

Tour operator 

Confusingly, this doesn't necessarily have anything to do with 'tours'. A tour operator is someone who organises and sells package holidays.

A package holiday is simply two or more of the following components sold at an inclusive price: transport, accommodation, other tourist service (such as day trips, etc).

A tour operator is responsible for arranging all the different parts of the package holiday, including making the bookings.

As well as covering the costs of these individual components, a tour operator's fees will also include an admin fee for themselves.

Travel agent

As well as selling the individual components of a holiday (flights, hotels, hire cars, etc), a travel agent can also sell package holidays.

However, a travel agent doesn't organise the packages and isn't responsible for making bookings. They're a middleman between the customer and the tour operator; it's a bit like how an insurance broker sits between the insurer and the customer.

Of course, a customer can buy several of the individual parts of their holiday from a travel agent and pay for them all in one go. This isn't a 'package' though, because the agent divides the fee to pay for the separate parts of the holiday.

Unlike a tour operator, the cost of a travel agent doesn't include an admin fee. Instead, travel agents receive commission from the hotels and airlines they refer customers to.

Why does it matter? 

Since tour operators have a lot more responsibility, insurers reckon it's riskier. There could be a problem with the flight, the accommodation, or the activities. Just one would be enough to ruin someone's holiday, but what if there were difficulties with all three?

Even if a travel agent sells package holidays, it's the tour operator who would be liable if something went wrong. Simply put, travel agents are less likely to face a claim.

Anything else? 

Knowing which category you fall into is important for making sure you get the right insurance cover.

If you're a tour operator looking for professional indemnity, we recommend the British Insurance Brokers' Association. They have access to hundreds of brokers, so they should be able to help you find what you need. Call them on 0370 950 1790, or visit their website.

And if you're still unsure about which type of insurance you think you need, give the team a ring on 0345 222 5391 and we'll be happy to help.

Image used under license from Shutterstock.

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