Tourism Insurance Part 3

Summary: Part 1 in this series covered an introduction to insurance, an outline on the EC Directive, the basics of risk management, and financial guarantees, while Part 2 looked at liability insurance.
Part 3 concludes the subject of liability.

TYPES OF INSURANCE

The five kinds of insurance that apply to the tourism industry are:

1. Financial Guarantee (Insurance Bond) –  See Part 1 HERE.
2. Liability Insurance – See Part 2 HERE. (continued in this Part 3 post).
3. General Public Liability
4. Passenger Liability
5. Road Accident Fund Amendment Bill
6. Vehicle / Property Insurance
7. Travel Insurance / Medical Rescue
8. Other Business Insurance (Buy & Sell, Key Person, Provident Fund).

How much Passenger Liability cover do you need?

As a general rule of thumb, the cover you need depends on the average number of passengers that you transport at any one time and the net worth of the individuals that you are transporting.

Some policies recommend one million per seat but this does not make sense as it is more likely that one passenger in an accident will be more seriously injured than others and one million will not be enough to cover that one person in the event of serious injury.

TIP: It is better to ensure that the indemnity limit covers all occupants of a particular vehicle, on a per-incident, per-occurrence basis, regardless of the number of passengers.

Of course, the number of passengers that your vehicle is licensed to carry does make a difference in calculating the cover amount required. For instance, ten million may be sufficient for a microbus but a coach may need as much as 100 million.

Let’s look at the sequence of events that could occur in the event of a serious bus or minibus accident:

• The accident occurs, quite often in a remote area in bad conditions and with limited communication facilities. If the driver or guide is able, they will immediately seek medical assistance, either by phone or by alerting passing motorists. This might be done by a passer-by, a nearby landowner or even by a surviving passenger. Obviously the first priority is to tend to anyone in need of immediate medical attention, and those in desperate need may require airlifting. Normally the police are alerted at this stage and they will take eyewitness reports as well as a statement from the driver if he is able. No one can control the exact chain of events in accidents and one can only hope that common sense prevails and guardian angels are close at hand.
• At some stage the head office of the company involved will be alerted to the disaster. These are the calls that we all live in fear of receiving. They are very difficult to handle if made by a hysterical client or any third party and one must ensure that every attempt is made to only deal with a responsible logical person who can speak English and who understands the ways of the country where the accident has occurred. Obviously the ideal person is a member of your staff wherever possible. At this stage a senior member of the company involved must take responsibility for coordinating the whole event and this person must be mentally and procedurally equipped for the task at hand. This will often entail dealing with medical rescue teams and liaising with nearby accommodation establishments.
• An accurate factual report must be drawn up as soon as possible, preferably with input from your driver. This must not try and apportion blame but it must be to the point, with all relevant facts that any next of kin would need to know. Along with this one must try and ascertain the status of each and every client and their whereabouts relating to their injuries and to which hospital or doctor they have been transferred. Once in possession of this, this report should be made available to overseas agents for their information and for the next of kin. This report must not accept any liability but it must be factually accurate, as obviously one must not cause undue distress to anxious relatives. Such a report may be made available to the press should they already have been alerted.
• Your local insurance company or broker must also be informed as to what has happened so that they can also start to get their procedures under way. This is important, as it is ultimately the insurance assessor who will play a vital role in deciding the extent of liability if any and he can also act as the go-between your clients and your company.
• It is ideal to get a senior member of staff to the site of the accident as soon as possible. This is a difficult task as this individual is likely to take abuse and to bear the brunt of all sorts of accusations. As people are injured and traumatised they feel vulnerable and expect your company to take care of everything and pay for absolutely all incurred costs. It is a very difficult tightrope that the responsible person must walk, and there are no hard and fast rules here. Obviously where possible your company must assist all passengers in getting to a place of comfort or to medical attention. It is at this stage that one has to ascertain the insurance that each passenger is carrying and attempt to alert these companies abroad. Unfortunately many clients still do not carry sufficient travel insurance, and some none at all. It is for these eventualities that all companies in Southern Africa should INSIST THAT ALL PAX TRAVELLING ON THEIR TOURS HAVE COMPULSORY COVER and details of such cover must be recorded at the start of the tour and kept on record in case of an emergency. In the heat of the moment it is very difficult to decide to what financial extent one is obliged to go. Distraught passengers will request five star accommodation, phone calls all over the world, first class flights back home and the like. Should you oblige these requests and run up huge accounts on their behalf, you are unlikely to ever recover these.  These expenses are what their insurance should be picking up and should not be for your company’s account.
• Your own insurance company should agree to cover a limited amount of comfort expenses, which could obviously alleviate an unpleasant situation but try and get clearance for this from the assessor or better still, check that it exists in the policy wording prior to obtaining cover. It sounds terrible to have to think of money whilst people are in pain and bleeding but this is the reality of the world in which we live. Remember that accidents will happen, whether your company is at fault or not and EVERYONE must carry insurance for this eventuality.
• A necessary task here is also that of offering any uninjured or unaffected passengers the opportunity of carrying on the tour in another vehicle, with another guide, should they so desire. Obviously this will depend on numerous factors and generally it is unlikely that anyone will wish to continue in the event of a serious accident. However some clients may well wish to still try and make the most out of their remaining stay and your company is obliged to try and comply with this request if possible.
• Once clients are all in good medical hands or at a place of comfort with access to communication links, the role of the mediator is over. Clients have to take control of their own individual situation and agents have to alert next of kin and activate things from their side. Monies paid out of pocket by your company justifiably may be claimed from your insurance company. Only after the assessor has completed this task will liability be apportioned. This is actually an issue for the insurance companies and does not really affect you. Should your company be liable for whatever reason, and you are sufficiently covered, your insurer will handle all claims and they should be settled. In most cases negligence is very hard to prove and the onus will be on the individual client to be sufficiently covered.
• In the event of a death of a client in an accident, the body will eventually be sent to a local mortuary. The process of repatriating the body to its country of origin is complicated and bureaucratic. The costs associated with this would normally be covered under your client’s personal funeral policy or travel insurance policy, which again highlights the need to record such details prior to undertaking a tour.
• Finally when all the dust has settled, a reality that your company must face is the recovery of the vehicle. This can be costly and is only covered under the vehicle’s comprehensive insurance policy.

Obviously such an accident is every company’s worst nightmare but one must be prepared for it because the manner in which you handle it can mean the difference between the success or failure of your company.

Below is a list of pointers that an efficient operator must have in place to avoid unnecessary risk and the risk of being liable:

• In South Africa, the driver / guide must be legal in all respects. He must carry the correct driver’s licence, a valid Professional Drivers Permit (PrDP) and if applicable a valid tourist guides licence
• The driver must have had adequate rest prior to the accident so that fatigue cannot be cited as a factor contributing to the cause of the crash
• Obviously the driver must not be under the influence of alcohol or any drugs at the time of the accident. Should he or she have consumed an unreasonable amount of alcohol or be perceived to have partied until late the night before, this could count against you
• The vehicle must have been mechanically sound prior to the accident. A proven service record will help. Tyre wear will always be a critical factor
• The speed at the time of the accident will be crucial
• A company’s past accident free record will certainly be in your favour
• Should the driver have undertaken any driving training, this would be of tremendous help
• Eyewitness accounts must be followed up, road surface and visibility conditions must be noted
• Extra precautions like safety belts throughout the vehicle will also count in your favour.

Sometimes no matter what precautions you take, an accident will still occur. The human factor will always play a role, hence the need for insurance.

Unavoidable negligence is not a crime. Even if your company is found liable, it does not mean that you will not be covered. In fact quite the opposite – that is the very reason why you are insured.

Obviously, the extent of the negligence is a factor, as is the extent of injury to a client. It is for these reasons that this cover has to be substantial. One can imagine the claim when an individual is paralysed for life and you are at fault.

Where a company can be crippled is when they are guilty of blatant negligence and their cover is either non-existent or inadequate.

Read more in this series:

• Understanding Tourism Trade Insurance Part 1
• Understanding Tourism Trade Insurance Part 2
• Understanding Tourism Trade Insurance Part 3
• Understanding Tourism Trade Insurance Part 4
• Understanding Tourism Trade Insurance Part 5
• Understanding Tourism Trade Insurance Part 6
• Understanding Tourism Trade Insurance Part 7