Case Study 02: Why Liability Insurances are vital for every Tour Operator.
Summary
Entity involved: A small tour operator based out of Connaught Place, New Delhi
Trip details: A 10-day trip to Bali and Malaysia for a family of 4, amounting to ₹3.4 Lakhs.
Issues faced by the traveller:
- Pre-booked transport wasnot available during the Malaysia leg of the trip
- Poor coordination by the local agent whose representativeacted rudely and threateningly
- The travelers incurred out-of-pocket expenses to arrangealternative transport despite these being pre- paid in the package
- Theyalso missed excursions due to delays in scheduled pickups, severely impacting their holiday experience
Outcome: The Delhi State Consumer Disputes Redressal Commission found the tour operator liable having failed to deliver promised services
Monetary fines: ₹3.8 Lakhs including refunds for services, compensation for mental agonies, reimbursement for incurred expenses and litigation expenses
Key takeaways
The foremast way by which tour operators can safeguards their business interests against liabilities when engaging with third- party vendors is to sign well-drafted SLAs with the vendor. This is followed by a robust monitoring mechanism.
This case underscores the critical importance of comprehensive tour liability insurance for every tour operator. The number of cases and damages levied by court have generally increased in recent years. Hence, the tour operators must secure their financial stability through suitable liability insurance.
As liability insurances are complex and complicated products, it is important to engage professional insurance brokers who have a thorough understanding of the tourism industry, product and provide support during the claims process.
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Gunjan Hans
Consultant, Travel Insurance
+91-9899044229
gunjan.hans@safetree.in
Akarshit Sonkar
AVP, Corporate Sales
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akarshit@safetree.in
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