The other day, I sent an email to Mark Pestronk regarding a blanket E&O Insurance policy and the protection or coverage it offers to an RTA. This is self explanatory.
February 22, 2008
Hi Mark--
Someone asked me a question and I had no clue and thought you might know.
A client books a trip with an RTA or Independent Contractor and something goes horribly wrong and they sue the "agency". Where does the liability fall? I know YTB says they have a blanket E&O policy for their 140K agents. I am sure their website disclaims liability. I am sure they would say the RTA is an independent business and disclaim liability. So, where does the liability ball fall? Does it make a difference if the transaction is completed by the client online by themselves? Or does liability shift if the RTA sells and processes it by themselves. It just seems to be such a grey area and one that is untested to date.
Any thoughts?
Hope all is well.
John
and the reply....
February 27, 2008
John:
It is not a gray area, really.
Liability for negligence or breach of contract falls only on the IC, not on the host. As a practical matter, the host will get sued anyway, as the consumer and his attorney cannot tell the difference.
Insurance does not affect my answer one way or the other. If the host's insurance covers the IC, it does not follow that the host has liability to the consumer.
Finally, the website disclaimer tends to deter suits against the party or parties named in the disclaimer. Again, it does not affect liability for negligence of breach of contract if something goes horribly wrong.
Mark
Law Offices of Mark Pestronk, P.C.
910 17th Street, N.W.
Suite 800
Washington, D.C. 20006
Phone: (202) 833-1900
Fax: (202) 315-3677
Oh so some hack lawyer friend of yours is all knowing now? Nice try Johnny boy!
ReplyDeleteHack lawyer? Mark Pestronk is a leading travel industry lawyer. I'm sure he'd be amused at being called "a hack." It shows, once again, that certain elements are very ignorant of the industry.
ReplyDeleteJohn;
ReplyDeleteIn the one or two problems you’ve been able to find concerning trips going wrong with YTB RTA’s who was it that took care of the issue?
YTB or the RTA?
Not the point, Doug. Most agencies would have taken care of the issues directly also. E&O, because of the cost and the consequences of claiming on it, is very rarely actually invoked. The point is that YTB says they cover all their ICs for this, and yet it is the IC that will get sued. YTB gives the impression that the IC is totally immune from any liability. Not true.
ReplyDeleteI am no attorney but the attorney specifically mentioned "breach of contract" and nothing else "horribly going wrong" addressing John's question.
ReplyDeleteMy problem with that is where are the 2 parties entering any contract when the customer purchases online.
I need to add because I can't edit here.....but with respect to the letter, he specifically mentioned that insurance has nothing to do with it. AND.....again if a customer goes to the website to book how can the RTA possibly be negligent or breach a contract????
ReplyDeleteWhy don't you send him a letter asking him that?
"Oh so some hack lawyer friend of yours is all knowing now? Nice try Johnny boy!"
ReplyDeleteThat my friend is defamation of character and slander....
Heck, even I, one who basically does my own thing and doesn't get involved with the travel vendors as much as John would due to his position at his agency even know that Mark Pestronk is "a leading travel industry lawyer". I'm not one for being too concerned with who is in charge of what and all of the "names" but that one I do know and would be able to answer that Jeopardy question if it came up :-) Seriously though, he knows this industry inside and out from a legal standpoint.
ReplyDelete"AND.....again if a customer goes to the website to book how can the RTA possibly be negligent or breach a contract????"
ReplyDeleteBy 'owning' and operating a website, and accepting payment (commission) from a client, an RTA is creating a fiduciary relationship with the client. The client is booking with XYZ Travel, not YTB (even though YTB is the host). The client will sue everyone, including YTB, but the primary target will be the RTA.
Horribly wrong. Say someone books online on your website to visit Belgrade. Supposing they are mugged, robbed, or shot. The RTA will likely be liable unless they had particularly warned the client and have proof.
ReplyDeleteClients have been known to sue for NLV on cruise ships. If you have a client on a sick ship and did not advise him as such and he contracts the illness and decides to sue--bingo, you are on the hook.
In the case of the client of the Joystar agent, it clearly stated that he was going to sue the agent but that she had no real assets. Legal action is still a possibility.
So, this is posted to the RTAs that have told me (at different times) that they don't need any E&O insurance because YTB takes care of it. That they don't need liability insurance because it is covered under YTB's E&O policy, etc.
Can anyone show me a copy of the rider or the Cert for the YTB policy? I would be curious to know the limits. If I had to guess, it is probably VERY low!
I feel I have to first defend Mark Pestronk - why would someone post something questionning Mark's experience/advice without looking up who Mark is? Are you stupid?! For your information, there are about 10 well-known Attornies in travel agency law and Mark is one of them. He and one other guy pretty much have the whole of DC, close-in VA and MD wrapped up ... can't remember the other guy's name = Andy something......
ReplyDeleteThe crazy thing is that actual riders on ICs are very cheap - about $30 a year! You'd think YTB could take that out of the $499, wouldn't you?
ReplyDeleteJohn:
ReplyDeleteYTB is an open book. I would love to have access to all of the records of your company . . . sales figures, profit and loss, customer complaints, etc. Even a few numbers so we could all examine them, pick them apart and put our spin on them.
You know more about YTB than any other travel company. But that's not good enough for you. You were frustrated yesterday that you could not have the exact number of RTAs that have taken Marc Mancini's courses. But, since YTB did not supply that to their "great friend" and "unbiased reporter", you INSINUATED that very few have taken the training. Now you want a copy of the E and O policy? Why don't you email Ted, your YTB email buddy? Maybe he can help you.
Whining about not having enough inside information about YTB? That's REALLY funny!
You are right LB--I am a privately held company and my records are NOT public. That was my choice as it was YTB's to be public. And if YTB was not infesting the industry with folks that are (for the most part) untrained and unprofessional, there would be no problem.
ReplyDeleteAs to the E&O. I was not whining. To be honest, it does not matter to me--when someone that books travel with you, they are gonna sue YOU --not me. I know I am covered. I just bring it up as most of the RTAs simply accept YTB at their word and we have seen where that word tends to fall a bit short sometimes. But if the threat of being sued exists, one ought to know if they are covered and by how much insurance.
I only opined that I bet it was minimal. Sort of like the RTA insurance...it might be good for a broken finger at the hospital, but if you have a heart attack..you are screwed.
I don't need it or want it. But I might suggest the RTAs ask for it. Coach and Scott saying 'you are covered" is not gonna carry any weight with Judge Judy!
The insurance is what it is . . . and no one to my knowledge is saying that it is a major medical. Again, right there for anyone to read and know exactly what it will or won't pay. But, for some people with health problems or in a situation where they cannot afford traditional major medical insurance, it fills a need. It generally takes a group policy to be granted coverage without evidence of insurability. This provides a way for those people to get some form of coverage.
ReplyDeleteI have over 500 RTAs on my Team and approximately 50 have taken the coverage. That's not a high percentage, but they are certainly glad they have it.
THe medical was an illustration in case you missed that. We are talking about E&O insurance here and my suggestion is that YTB put it "right there for anyone to read and know exactly what it will or won't pay."
ReplyDeleteNot to the world, but to the RTAs so they know EXACTLY what is covered and what is not.
I will venture to say that a good portion of the RTAs are operating as a SOle Proprietership. If that is the case, is YTB personally going to protect their hoome, bank accounts, vehicles, etc fro being seized if they lose a law suit? Did not think so!
Can someone shed some light on how many lawsuits, over travel going "horribly wrong", are litigated in the US each year?
ReplyDeleteHow about settlements? How often does this occur? What are most of these suits about? Mark did mention "liability for negligence or breach of contract."
People sue for everything these days, win or loose, and it's prudent to protect yourself from liability exposure as reasonably as possible.
When I was in Hawaii a few years ago there were some vacationers staying at one of the high rise hotels in Honolulu. A terrible thing happened. Their small child was left unattended on the balcony. The child slipped through the fencing and fell to it's death. Would it be far fetched to say whoever arranged their stay at that hotel should have warned them of the dangers of leaving a child unattended on the balcony? Does the travel agent share some responsibility for this tragic accident? I would say, no. But I have seen lawsuits were everyone is named including 100 John Does.
olescorekeeper
John states that his company records are not public, while ytb's are. It makes me wonder who has something to hide?
ReplyDeleteHere's some info you might find interesting. This is an interview with Travel Trade and Sorensen.
http://www.traveltrade.com/news_article.htm?id=498
Like ibtravel said, YTB is an open book. The real info is out there. You just have to know where to look for it.
About E&O:
http://www.techinsurance.com/ProfessionalLiabilityInsurance_2.aspx?gclid=CIjU8Zq655ECFQERPAod-gYTfA
Oops. I meant "lose" not "loose".
ReplyDeleteAnonymous said...
ReplyDelete"John states that his company records are not public, while ytb's are. It makes me wonder who has something to hide?"
Well, I do know a little secret about John that I bet he doesn't even know. It's from the Better Business Bureau of MD. Of course, I will not divulge it here without John's permission. Is it OK with you John?
olescorekeeper
Love or hate YTB John has made a very valid point. I just contacted a few people that work with other hosts and franchises to see what their coverage was for E&O. The deductibles were very wide ranging from $1,000 to $25,000 per incident.
ReplyDeleteLaw suits do happen! A few years ago I was sued because a honeymoon couple had their trip ruined because the cruise line was painting in an area near their cabin and the bride got sick from the smell. It ended up fine with me, they took me out of the mess, but in the end did hold the cruise line at fault.
Crap happens -- at least find out how good or bad your policy is and not just take their word that you have E&O.
Post away Olescorekeeper.
ReplyDeleteI do not deny that YTB has a blanket policy. But that blanket might cover you for $100 and if you are sured for $1000 you are $900 out of pocket.
To get stats, I guess you need to check the claims records of the insurance companies that issue E&O. I am sure that is not public record.
Ole, Yes, the agency could be mentioned in that tragic accident. I personally know of one agency that was named in the suit of that UA crash in Sioux Falls (?). While the judge did not deem them liable, the legal costs the incurred were substantial. Doesn't seem right, but there it is. I keep my E&O up to date, just in case....
ReplyDeleteThat's another reason why I don't want my website to have a booking engine.
CruiseOne, what was the amount of damges the honeymoon couple were suing you for?
ReplyDeleteolescorekeeper
They were suing for about $5,000 for reimbursement for the cruise and air plus "pain, suffering and emotional distress" that they put a very high figure on -- I can't remember the exact amount.
ReplyDeleteJohn, just curious. You've been in the business for many years. What..about ten? In those ten years, how many total times have you been sued for liability for negligence or breach of contract?
ReplyDeleteIf so, what were the damages sought by the petitioners?
olescorekeeper
Scorekeeper -- does it really matter? An agency can go through 30 years without a suit, but again they could be in business months and one hit. When people file lawsuits it splatters and everyone gets listed.
ReplyDeleteA few years ago I had a friend that had clients booked on an Alaskan. They booked a helicopter tour/landing on the glaciers with the cruise line, the agent had nothing to do with it. Helicopter went down and all were killed. The family has had this tied up in the courts for years. And they are suing big time! So far she is still listed along with the cruise line, tour company, etc.
CruiseOne said...
ReplyDelete"They were suing for about $5,000 for reimbursement for the cruise and air plus "pain, suffering and emotional distress" that they put a very high figure on -- I can't remember the exact amount."
Well, if it was just the $5K, I wouldn't have worried about it. Let's say they wanted $25K for PS&ED. I doubt very many lawyers would take this case without a healthy retainer. Of course the couple could have sued you pro se.
Not such a good idea though.
olescorekeeper
CruiseOne said...
ReplyDelete"Scorekeeper -- does it really matter?"
Well..no. (Sorry, I do have to lol. Many here have asked John that same question on multiple occasions regarding YTB business operations.)
I'm was just curious to what John's particular experience has been.
And Cruise, I understand that standing on the same spot, lightening can strike you the first day, 30 years from now, or maybe never.
olescorekeeper
I do not post much on here but do read this train wreck. Amusing as it is some days with all the ramblings you folks do, people selling travel should really know the business they are getting into and know the liability involved.
ReplyDeleteTake away all the wise cracks many of you do on here and be serious for a moment. When you hang out your shingle, it does not matter if you are a RTA, a web-based business a storefront location or a home based location you could become liable. It is that plain and simple. Therefore, you had better know what coverage you have and how it applies to you. The bottom line is YOU are the business!
Do not rely on hearsay from your-uplines, your-downline or even your-sidelines if there is such a thing. This also extends to the people that sold you your travel site, your hosting company or whatever they call themselves these days. The only time to rely on these folks for accurate information is if they are an attorney acting on your behalf. The bottom line is the responsibility lies on your shoulders to know and understand the law and how liable you could be in the event of a situation. Ultimately, everyone else is unaffected by whatever happens to you and will run as quick as they can.
If you want to know how liable you could be, I suggest you read the following two
web links. This brings to light how responsible you could be without properly protecting yourself or knowing what is being sold/purchased via your company electronically.
Read this first: http://www.jewishvirtuallibrary.org/jsource/Terrorism/achille.html
Now read this:
http://books.google.com/books?id=vbX2tuKIkYcC&pg=PA169&lpg=PA169&dq=klinghoffer+travel+agent+lawsuit&source=web&ots=_MmjFtQ8dD&sig=FFL9Ij5G5RuzpGWVH6JHgwfNehQ&hl=en
This gives you a pretty good outline on how liable you could be if you don’t know what you are doing in this business.
Barry
Sorry it did not pick up the entire web link when I posted it.
ReplyDeleteThis should be the second read.
http://books.google.com/books?id=vbX2tuKIkYcC&pg=PA169&lpg=PA169&dq=klinghoffer+travel+agent+lawsuit&source=web&ots=_MmjFtQ8dD&sig=FFL9Ij5G5RuzpGWVH6JHgwfNehQ&hl=en
Barry
Ole
ReplyDeleteMy businesses have never been sued by a client--we had an issue with an advertiser and a landlord at one point, but that is about it.
I have stated before that I figured that if damages were under $20K I likely would not submit a claim because of the high increase in premiums.
With that said, the most I have ever paid out to a client for an error was $500. Mind you, the people that work for me have a LOT more time in the biz as I do (and I have been in a little more than ten years)and all have either their MCC CTA or CTC designation.
Mistakes are rare. I did have an employee that screwed me out of about $10K before she quit, but that was negotiated between the airline that gave me a $10K debit memo and the employee and myself.
Well lets try this again for some reason is will not post the entire web link when I paste it in.
ReplyDeletehttp://books.google.com/books?id=vbX2tuKIKYcC&pg=PA169&lpg=PA169&dq=klinghoffer+travel=agent+lawsuit&source=web&ots=_MmjFtQ8dD&sig=FFL9Ij5G5RuzpGWVH6JHgwfNehQ&h1=en
If that link doesn't work do the following.
Google: Klinghoffer lawsuit
Then look for this title link:
The Achille Lauro Hijacking: Lessons in the Politics and Prejudice of Terrorism - Page xix
Read what happend to that travel agent/agnecy
Barry
Thanks for the reply John. As I said, I was just curious to see what being in the business for 10 years might bring.
ReplyDeleteBarry, you are right on target with your post which pretty much brings this topic to a conclusion IMHO.
olescorekeeper
As others have said--all it takes is one. Training and experience mitigate some of the chances, but all it takes is one.
ReplyDeleteThere was a poster on Tripso that was robbed on a CCL shore excursion in MBJ at kjnifepoint and a knife was held to his 12 year old daughter's throat. He is going after CCL for it because they sponsored the excursion, they failed to warn people of the danger, and I believe it was booked online direct with Carnival so they are the agent as well.
John said, "He is going after CCL for it because they sponsored the excursion, they failed to warn people of the danger"
ReplyDeleteGarsh, name me a place anywhere in the world were you wouldn't get mugged or robbed. What about every conceivable peril that exists on this earth. Can you imagine how many pages of disclosure one would have to read and then sign a risk wavier.
"Warning! From the time we take you onboard our vessel, until the time we return you to the originating port, you could be subject to one or more of the following:" (fill in the blank)
olescorekeeper
I agree completely Ole...but unfortunately we live in a litigious world. People will sue over the mundane just as easily as they will the serious and if you are not protected--you are screwed.
ReplyDeleteEspecially wiht travel, there is so much out of your control, but all it takes is a sympathetic judge or jury and you are done!
This is not only a warning to YTB, but to anyone else that is operating under someone else's E&O policyt. Make sure you know what the policy covers,IF you are covered, and if not, secure your own
Absolutely.
ReplyDeleteolescorekeeper
We actually had a client in my office that sued one of the leisure agents because it rained on her honeymoon. Even though she was told it was rainy season. People will sue for the most stupid reasons, but true if you get one judge/jury to sympathize its all over.
ReplyDelete" That my friend is defamation of character and slander.... "
ReplyDeleteLOL - not even close.
Too funny . . .
Tom
John said, "This is not only a warning to YTB, but to anyone else that is operating under someone else's E&O policyt. Make sure you know what the policy covers,IF you are covered, and if not, secure your own."
ReplyDeleteThat is exactly why I did secure my own about 6 months ago. I finally got tired of living with the risk that my host agency would bail me out if something happened. In hindsight, I should have gotten the policy as soon as I got in the business over 4 years ago. Fortunately, nothing happened that would have caused me problems.
John, as a former YTB RTA, I appreciate your efforts to "educate" the uninformed. Unfortunately, the reality is...not many even bother to read between the lines of the "terms and agreements", policies, etc. that are posted somewhere in their backoffices regarding these matters. The bottom line is they are not in the business to be "travel agents" or even "referring travel agents". They're in it to recruit and make money on that side.
ReplyDeleteI get emails every day from my former level 2 directors and not once have they ever mentioned the new YTB E-online courses and encouraged anyone to attend, nor do they ever mention travel booking for that matter. All they talk about is "building the business" and making the money from doing so. Of course there are a few who take it seriously like Doug, but he's an exception.
Noregrets--thanks for your honesty. I think you are spot on!
ReplyDelete