Is professional indemnity insurance a legal requirement for travel agents in Australia?

While not a government-mandated license requirement, PI insurance is mandatory for accreditation under the Australian Travel Accreditation Scheme (ATAS). To maintain ATAS status through the Australian Travel Industry Association (ATIA), agents must provide a current Certificate of Currency for both Professional Indemnity and Public Liability insurance.

Does professional indemnity insurance cover errors in visa advice?

Yes. PI insurance is specifically designed to protect against errors and omissions, such as failing to advise a client on correct visa requirements or providing outdated documentation info. Because courts generally view visa advice as a basic professional duty of a travel agent, this is a standard and essential inclusion in most specialist policies.

Does this insurance protect me if an airline or tour operator goes bankrupt?

No, professional indemnity insurance generally does not cover losses arising from the insolvency or financial failure of third-party suppliers. To protect against airlines, hotels or tour operators going into liquidation, you would typically need a separate Travel Supplier Insolvency or Financial Failure policy.

Do I need run-off cover if I retire or close my travel agency?

Yes, run-off cover is essential because professional indemnity insurance is a 'claims-made' policy, meaning you must have an active policy in place at the time a claim is lodged. Since a client might discover a booking error years after the service was provided, run-off cover protects you against claims related to past work after you have ceased trading.

Are independent contractors and home-based consultants covered under my agency policy?

It depends on the specific terms of your policy, as some insurers automatically include sub-contractors while others require them to be named or hold their own insurance. If you use independent consultants who operate under their own ABN, you should verify that your definition of the insured includes them to avoid coverage gaps.

Does professional indemnity cover claims for refunds during a pandemic?

No, professional indemnity insurance typically excludes claims arising from Force Majeure events such as pandemics, natural disasters and government travel bans. If a trip is cancelled due to external factors rather than an agent's mistake, the policy will generally not respond to claims for refunds or compensation.

Professional Indemnity Insurance for Travel Agents

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As a travel agents you are at risk of being accused of failing to perform your duties.
Professional liability insurance can cover you for legal fees if someone tries to sue you.
If you are found to be negligent, Professional liability insurance can also pay for damages.

What does professional indemnity insurance cover?

Costs associated with court attendance and legal advice
Loss of monies for which you are legally liable
Negligence claims from errors or incorrect advice
Civil liability claims resulting from your business activities
Intellectual property rights infringements such as copyright or trademark breaches

Loss of documents for which you are legally responsible
Run-off cover to cover claims arising at a later date from a previous business or practice
Public relations expenses incurred in protecting your reputation, if damaged by a claim
Costs associated with official investigations and enquiries.

As a travel agent, you provide a professional service to your clients, advising them on travel itineraries, accommodation packages, travel insurance and more.
What claims? Any claim of negligence, error or omission that causes your client to suffer a financial loss. It might be unsubstantiated, but you still have to defend yourself in court and professional indemnity insurance pays your legal costs plus any damages that might be awarded to the claimant.

Make sure you read the Product Disclosure Statement (PDS)

2022 Finder research shows that 23% of Australians can't be bothered reading the PDS. A PDS includes a comprehensive list of all the inclusions of a policy. Make sure you are covered for what you need.

Finder survey: How often do Australians of different ages compare or switch their professional indemnity insurance?

Response	75+ yrs	65-74 yrs	55-64 yrs	45-54 yrs	35-44 yrs	25-34 yrs	18-24 yrs
once a year	2.33%	1.86%	0.58%	0.97%	1.18%	1.46%	1.43%
I never compare or switch		2.48%	2.92%	0.48%	0.79%	2.43%	1.43%
once every 3+ yrs		1.24%	0.58%	0.97%	1.18%	2.91%	2.86%
every 2 yrs			1.17%	0.97%	0.39%	0.97%	4.29%
more than once a year				0.48%		0.49%	1.43%

Source: Finder survey by Pure Profile of 1112 Australians, December 2023

How do I compare indemnity cover for travel agents?

The best way to find the right professional indemnity insurance is to compare a number of policies from different insurers. Some of the things you should look for when comparing include:

The amount of excess you must pay and whether it includes or excludes costs (legal fees)
Whether the policy includes run-off cover (cover for work you performed in the past)
Whether there are adequate reinstatements of the insured amount, in case you have more than one claim in a year
Whether the policy provides cover worldwide or only within Australia

Whether the policy provides cover worldwide or only within Australia
Whether the policy is specific to travel agents and clearly defines the exposures that are covered
What exclusions apply and whether they overly diminish your cover
The cost of the premiums and whether they reflect the cover provided
Whether the premiums are CPI-indexed to keep pace with inflation.

Consider an adviser

Professional indemnity insurance policies vary widely with insurers, so given that you will be seeking protection from claims that could run into the hundreds of thousands of dollars, it would be wise to seek advice from an insurance broker or your industry association, if you are at all unsure about what a policy contains.

Will I need public liability cover?

Public liability insurance is usually offered at the time of taking out professional indemnity insurance. Why would a travel agent need it? The same reason as any professional who deals with the public, to protect themselves from claims of personal injury or property damage.

As a travel agent, you undoubtedly have a place of business and when clients visit you there, you are exposed to the possibility of them slipping, falling, tripping or any manner of accidents that could occur on your premises.

It will usually cover your business, including subsidiary companies and your employees, provided they are performing their normal duties at the time of an incident.

What is doesn't cover

It will not cover any unlawful activity on your part or deliberate acts of damage or injury. Public liability insurance is usually very affordable and is a must-have for any business that has dealings with the general public, including travel agents.

Find out more about public liability insurance

What is the Travel Compensation Fund (TCF)?

The Travel Compensation Fund (TCF) was a regulatory framework for travel agents introduced back in 1986 to compensate customers who suffered losses when travel agents went bankrupt and failed to provide refunds or equivalent travel arrangements.

It was replaced in 2013 by the Travel Industry Transition Plan, which aimed to phase out by July 2014 both the Travel Compensation Fund and compulsory licensing for travel agents.

The growth in online travel agents and direct bookings was seen to have reduced the relevance of the TCF and was unfairly disadvantaging local travel agents, whose online competitors were not subject to the same regulations.

The old system has now been replaced with a voluntary industry-operated and accredited system for travel agents and a consumer advocacy body to deal with consumer issues.

Given that the TCF no longer exists, professional indemnity insurance has never been more important for travel agents, as clients who suffer financial losses will now be seeking compensation through any means at their disposal.

IMPORTANT: Travel agents no longer need to be licensed or be member of the Travel Compensation Fund (TCF). If something does go wrong, only consumers who purchased products on or before 30/06/2014 will be eligible for compensation for their losses from the TCF.

Talk to a broker about professional indemnity insurance for travel agents

FAQs

While not a government-mandated license requirement, PI insurance is mandatory for accreditation under the Australian Travel Accreditation Scheme (ATAS). To maintain ATAS status through the Australian Travel Industry Association (ATIA), agents must provide a current Certificate of Currency for both Professional Indemnity and Public Liability insurance.
Yes. PI insurance is specifically designed to protect against errors and omissions, such as failing to advise a client on correct visa requirements or providing outdated documentation info. Because courts generally view visa advice as a basic professional duty of a travel agent, this is a standard and essential inclusion in most specialist policies.
Yes, run-off cover is essential because professional indemnity insurance is a 'claims-made' policy, meaning you must have an active policy in place at the time a claim is lodged. Since a client might discover a booking error years after the service was provided, run-off cover protects you against claims related to past work after you have ceased trading.

Sources

Thank you for your feedback!

Written by

Richard Laycock

Editor

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Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance. See full bio

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2 Responses

GregAugust 16, 2017

Hi, I am looking for a quote on getting Travel Agent indemnity insurance. My business partner and myself both work independently from home. Would like to speak with an advisor please.

JonathanAugust 16, 2017

Hello Greg,

Thank you for your inquiry.

You can fill out the form “Compare Travel Agent Professional Indemnity Cover” and click “Enquire Now” green button to have your details forwarded to a licensed insurance advisor.

Hope this helps.

Cheers,
Jonathan

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Professional Indemnity Insurance for Travel Agents

Professional indemnity insurance for travel agents protects you if you make a mistake, are accused of negligence or sued.

Key takeaways

What does professional indemnity insurance cover?

Finder survey: How often do Australians of different ages compare or switch their professional indemnity insurance?