Supplier failure insurance is a critical form of cover for travel agents and tour operators, providing essential peace of mind for both you and your customers.
In this post we will explain what supplier failure insurance for travel agents and tour operators is, what it covers, and why you need it.
What is Supplier Failure insurance for travel agents & tour operators?
If you book flights or other travel services for your customers, supplier failure insurance will cover you if the airline or other travel providers suffer financial failure and go out of business.
If an airline or travel provider goes bankrupt, then they will no longer be able to provide your customers with the services that they have already paid for. Supplier failure insurance, also known as end supplier failure cover, will allow you to submit a claim for your financial loss, so that you can provide your customers with an alternative means of travel or accommodation.
What does Supplier Failure insurance cover?
If a supplier goes out of business after your customer has paid for their services, supplier failure insurance can cover:
- Refunds for any unused tickets, hotel bookings, or other travel arrangements.
- Additional expenses incurred if the customer needs to make alternative arrangements for travel and accommodation.
- Return costs, if the customer is unable to continue their trip because of supplier failure.
This insurance can provide cover for a range of travel suppliers, including:
- Airlines
- Hotels
- Car hire companies
- Coach operators
- Railways
- Car ferries
- Tour operators
What is the difference between Supplier Failure insurance and Financial Failure insurance?
Financial Failure Insurance provides a means of reimbursing your customers if you go out of business.
While financial failure insurance covers your customers if your business ceases trading, supplier failure insurance provides cover should other businesses you work with cease trading.
All travel agents and tour operators should have both forms of cover in place in order to offer their customers full protection.
For more, read our full guide to financial failure insurance for travel and tourism businesses.
Do I need Supplier Failure insurance?
If you sell flight inclusive packages as part of your travel agent or tour operator business, then you have a legal obligation to get an Air Travel Organisers’ Licence (ATOL). As part of this, you need to provide a means of protecting your customers’ money in case airlines or other travel companies go out of business.
This means that if you arrange flights for your customers, and if you are part of the ATOL scheme as a result, then you may have a legal requirement to get supplier failure insurance for your customers.
Even if you do not book flights for customers, it is still a good idea to get supplier failure insurance. It will provide essential peace of mind for both you, and your customers.
How to ensure you are fully covered as a travel agent or tour operator
At James Hallam, we have provided dedicated insurance services for travel agents and tour operators for over 20 years.
We will take the time to understand your business so we can tailor the best possible travel and tour insurance programme for you and your customers. This can include supplier failure insurance, and we will also advise the additional cover you may need to get comprehensive insurance at a competitive price.
Find out more about our specialist insurance services for travel agents and tour operators.