3 types of insurance all tour operators need

As a tour operator, you will be dealing with risk on a daily basis. On top of the typical risks that businesses face, you also face the additional risks unique to the tour industry.

For example, what happens if you have to cancel your tours due to weather or insufficient numbers? What about when a customer gets hurt while participating in your tour? These situations may vary in their rarity but the financial damages from these risks are always significant. Luckily, there are many types of insurance plans available to protect tour operators against risks.

With the help of Bob’s Hypothetical Kayaking Tours, we will go through the 3 most important insurance plans your tour needs to be successful in 2019 and beyond.

1. Asset & revenue insurance

While the specifics will vary depending on the nature of your tour or activity, you need to take all areas into consideration. This refers to things like:

  • Breakdown and damage of business assets (for example fires, burglary, general property, equipment breakdown). All Australian businesses have to insure company vehicles for third party injury liability. Your equipment and property investments are at great risk if you don’t insure them. TIP: Make sure to check your own federal or state laws to see what is legally required!
  • Business interruption (any interruption to the business which stops the business from making money, while you still have bills to pay). This includes interruption through a key person’s illness or bad weather.

If Bob’s Kayaking office was to catch fire and nearly everything was destroyed, Bob would lose money on bookings that would have to be cancelled, rent that still needed to be paid, wages that are still payable to his staff and all of the other regular expenses. A claim on asset & revenue insurance will pay for the expenses of the business while they are unable to operate due to an insurable loss.

2. Public liability insurance

Let’s say Bob can’t catch a break and one of his tour participants loses their phone, laptop, jewelry and glasses while having the time of their life on his exhilarating kayaking experiences. Public liability insurance will free Bob from any responsibility of paying back the stolen/lost items. Tip: Learn how to write a liability release form here!

While public liability insurance is very costly (the standard cover is $10M), most agents will refuse to resell your tour unless your tour has one. Remember that if you work with a third party contractor, you need to make sure that they have public liability insurance in place as well.

3. Workers compensation insurance

Bob can’t manage his kayak operation all by himself! He needs accountants to manage his numbers, tour leaders to run the tours and maintenance staff to take care of the kayaks. Many tours, such as Bob’s, involve a lot of physical activity on a daily basis. What would happen if one of his employees get seriously hurt? Even employees who work in Bob’s Kayaking office can trip on a cord and hurt themselves.

In Australia, you are legally required to take out workers compensation insurance for your employees. In doing so, you’re protecting your business against costly compensation claims as a result of workplace accident or illness. Workers compensation has to be taken out for all employees of a Pty Ltd company, including company directors and business owners.

However, business owners aren’t covered by workers compensation if they are a sole trader or a partnership. In this case, you can cover yourself for income protection in the case of accident and illness so you don’t lose revenue while you recover.

Where to look for Tourism Insurance

Without the right level of cover you may be out of pocket after a claim.

Start your search by:

  • Getting quotes from those specializing in tourism insurance
  • Asking others in the industry for recommendations
  • Contacting your local tourism organization and ask them for recommendations

It’s important to find a policy that’s right for your business, so shop around instead of jumping for the first quote you see.

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Image credit: Arturo Castaneyra


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