Mark Pestronk
Q: I am confused about the relationship between our agency's liability, on the one hand, and travel insurance, on the other hand. If we offer travel accident insurance and the client buys it, does that prevent the client from suing us for negligence if the client gets hurt on a trip and is covered by the insurance? If we offer insurance and they decline, does their decision affect our liability for injuries? If we have the client agree to the terms of our disclaimer, does that mean that the client cannot recover under the travel insurance plan? Finally, a more fundamental question: Do we have a legal duty to offer travel insurance; i.e., could we be successfully sued if we don't offer it and a client is injured?
A: Whether or not you offer or sell travel insurance has nothing to do with your legal liability to your client for negligence. Conversely, whether or not you are liable to the client has nothing to do with the offer or sale of insurance.
Let me start with the last question, as my answer will help you understand the rest of my answers: travel agencies and tour operators have no legal duty to offer any kind of insurance.
Your agency is liable for its own negligent acts or omissions. Examples based on the small number of existing court precedents are failure to warn about a destination danger or a potential supplier insolvency that your agency knew about or should have known about but that the client would not ordinarily have known about.
Under general principles of negligence law, what an agent should have known about or should have advised about is what a professional travel counselor in the community or specialized niche would have been expected to know or advise about, as described by each side's expert witnesses.
Insurance does not affect any of this. Even if the injuries that the client suffers are covered by insurance, the client can sue your agency for negligence. In setting a damages award, most juries are not even permitted to hear about whether insurance covered medical bills or the like.
Similarly, if the client declines insurance, your liability is not affected. The client can still sue your agency for its negligent acts or omissions.
It also follows that, if the client signs your disclaimer stating that you have no liability for accidents abroad or the like, the client can still recover on the policy regardless of what your disclaimer states.
So what is the point of offering insurance, besides the commissions on the sales? From the agency's point of view, the point is that, when the client buys insurance, the client is much less likely to decide to sue you in cases of nonmajor injuries, even if the client could win.
One more point: While you have no obligation to offer insurance, if your frontline agent overstates the coverage or forgets about one of the many exclusions in the policy, you could be liable for negligent misrepresentation, if the client could prove that he would not have taken the trip if the coverage had been correctly described. To prevent that unfortunate outcome, instruct your staff not to answer specific questions about what the policy covers but instead just to send the material provided by the insurance broker.