Q: Our agency operates a small number of tours each year, and I always worry that something might go wrong that would cause participants to sue us. Aside from using disclaimers, what other steps can we take to lessen the likelihood that we will be sued for personal injuries, nonperformance by our suppliers or loss of enjoyment?
A: Insurance brokers and underwriters often offer advice on risk management, and their advice is worthwhile because it is based on their years of actual experience paying for the defense of lawsuits against their clients.
The largest insurance broker for tour operators and travel agencies, Berkely Group, has a tour operator insurance application form that asks a series of questions about the operator's practices and procedures. While the list of questions is designed to help Berkely set the premium (or deny insurance), I have paraphrased and edited the list into the 10 commandments of risk management for tour operators. A tour operator that wants to avoid lawsuits should do as much of the following as possible:
1. Use disclaimers stating that you are not responsible for suppliers' acts or omissions.
2. Require land vendors to provide proof of liability insurance and require that your agency be named as an additional insured on the policies.
3. Set up an emergency hot line for complaints during the tour.
4. Offer or require travel insurance.
5. Have a crisis management plan.
6. Adopt a standardized vendor selection process for choosing land operators and destination management companies. Consider selecting suppliers that:
- Are recommended by other known and trusted suppliers or by industry colleagues;
- Have been operating for at least five years;
- Have a proven track record for safety;
- Have a written crisis management plan;
- Have a reputation for being among the most experienced local receptive operators;
- Can produce favorable credit references and financial statements; and
- Can be accessible 24/7 for handling contingencies and emergencies.
7. Have signed contracts with your suppliers, including a provision indemnifying you against the supplier's acts or omissions.
8. Perform, jointly with the suppliers, periodic, on-site reviews of tour elements.
9. Have your employees accompany excursions.
10. Adopt and follow a standard procedure for addressing customer-service complaints.
Here are a few more commandments that I would add, based on my experience:
11. Get all participants age 18 and older to sign your disclaimer (or your tour application that calls attention to your disclaimer) before any cancellation penalties apply, so that you can send a full refund to anyone who refuses to sign.
12. If it is impractical to obtain a signature, then require the participant to click "I agree" on your website's tour-participant disclaimer page and make sure your online merchant service records the agreement.
13. If the tour participants are part of an organization that is a corporation or other legal entity, get the entity to sign a contract under which it agrees to indemnify you against participant claims that are not due to your acts or omissions.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].