$1M Professional Liability (E&O) Insurance for Travel Agents

For travel agencies asked by a corporate or group client for $1M: your Professional Liability policy must pay up to $1M for one covered claim caused by a mistake in your booking or planning work.

What does a $1M requirement mean for travel agents?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your services caused a client a financial loss. A typical clause in a corporate travel agreement looks like this:

• Per claim: the most the policy pays for any one claim. Here, $1M.
• Aggregate: the most the policy pays for all claims in one policy year. Here, $2M. A $1M/$1M policy would not meet the limits in this clause. A $1M/$2M policy would match the limits in either wording, but other terms in the clause, such as the two-year tail, also matter.
• Claims-made: the policy covers claims made and reported while it is active, for work done on or after the retroactive date (the earliest date of work the policy covers).

Who asks travel agents for $1M?

Some leisure agents may never see an insurance clause. When $1M comes up, it is often from:

• Companies that hire an agency to manage employee business travel.
• Meeting and event planners with group air and hotel blocks.
• Schools, nonprofits and associations booking group, study or member trips.
• Host agencies (larger agencies that independent agents work under) and franchise networks that require independent agents to carry their own coverage.

Larger corporate accounts and big group programs may ask for $2M instead, because one mistake on a large group booking can cost more than $1M. A $2M per claim limit is a different request from a $1M/$2M policy, which only raises the yearly total. See $2M Professional Liability for travel agents.

How is $1M built?

At $1M, the limit is usually one primary policy (the policy that pays first), with no excess layers stacked above it. Travel agents usually buy a form called travel agents E&O, written for booking and trip planning work. If you run your own tours, make sure the policy names tour operating, and expect the client to also ask for General Liability (coverage for injury or property damage to others).

Before you sign, read the policy for independent agents left off it and for exclusions that touch your work (see the supplier question below). A commercial umbrella almost never covers Professional Liability. Clients usually cannot be added as an additional insured (a party that gets coverage under your policy). Many clients accept a certificate of insurance (a one-page proof of your coverage) instead. It gives the holder no rights under the policy, so check what your contract requires.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage and on what terms. For travel agents, they usually ask about:

• Commission and fee revenue, plus gross bookings.
• Your mix of leisure, corporate and group travel, and whether you run your own tours.
• How many employees and independent agents work under your agency.
• How you advise on passports, visas and travel insurance.
• Prior claims, anything that could become a claim, and your current policy and retroactive date.

What affects the cost?

• Type of travel. Groups, international trips and your own tours usually cost more than simple domestic bookings.
• Revenue and volume. More bookings mean more chances for a mistake.
• Claims history. Prior claims can raise the price or narrow options.
• Aggregate and retention. $1M/$2M usually costs more than $1M/$1M. A higher retention (the amount you pay on each claim before the policy pays, like a deductible) usually lowers the premium. See what drives Professional Liability cost.

Frequently asked questions

Do I need $1M Professional Liability (E&O) as a travel agent?

Often, yes, if a corporate, group or host agency contract asks for it. Here are two hypothetical claims it could cover. An agent says a client's passport is fine, but it does not meet the destination's validity rule, and the client is denied boarding. Or an agent misses the release date on a hotel block, and the client is billed attrition penalties (fees for unused rooms).

Does Professional Liability pay if a travel supplier goes out of business?

Often not. Many travel agents E&O policies exclude a supplier's financial failure or offer only a small sublimit (a smaller cap inside the main limit).

Is $1M/$1M enough if my contract says $1M/$2M?

No, a $1M/$1M policy would not meet a $1M/$2M clause. Request new quotes for a $1M/$2M policy. Morrow can request quotes for it and look for options that keep your retroactive date and prior acts coverage where the market allows. Keep your current policy in force until the new one starts. Report anything that could become a claim to your current carrier before that policy ends.

Do I still need coverage after a corporate travel contract ends?

Often, yes. Claims can come months after a trip, and some contracts require coverage to continue after they end. Check your contract and policy wording. If you stop coverage, an extended reporting period (a "tail") can give you extra time to report claims about past work. See tail coverage.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.