Complete Guide on Insurance and Guarantees for Travel Agencies

“I am convinced that half of what separates successful entrepreneurs from those who have failed is perseverance” – Steve Jobs

Perseverance is what it takes to open your new travel agency. Endless paperwork, decisions, and a lot of money spent before the doors were opened.

Luckily, if you are here reading this, you are an entrepreneur, a persistent person and we are going to help you control some of those most important start-up expenses.
Its importance lies in two key aspects: its implication in your financing capacity and its obligation to obtain the license.

How are we going to help you?

With a guide on compulsory insurance and guarantees for travel agencies.
Without these insurances and guarantees, they will not grant you the license. We will make special incidence in the matter of guarantees for travel agencies, since they are the ones that can most affect the future of your business.

What are those compulsory insurances and guarantees for travel agencies?

They are mainly three:

  • Guarantees before the Administration for travel agencies.
  • Civil Liability Insurance for travel agencies.
  • Collective Bargaining Insurance. In case of having employed workers.

Let’s see point by point what each one is for.

Guarantees for travel agencies

They are required by the Administration to respond to the consumer in the event of non-compliance with the obligations provided to consumers.

Very nice, but… what does all this mean?

Don’t worry, here comes the example.

Why is the guarantee for travel agencies required?

Practical example: You
finally open your own travel agency. Now, imagine that you sell your client the typical flight + hotel package. Two days before the trip, the airline goes bankrupt and suspends all its flights.

The client, with all the reason in the world, will be angry and will look for a person in charge. Do you know who it is?

If you are thinking that it will only be the airline, you are wrong.

The travel agency, having mediated, is also indirectly responsible. So, the customer can claim the money and then, you will have to fight with the airline.

For events like this, the endorsement is required from the Administration .

 

Now, let’s gut all about travel agency endorsements

Who is it presented to?

Before the competent delegation of the corresponding Autonomous Community. Normally in the different Delegations of Economy and Finance.

 

Who should submit it?

This endorsement or surety insurance for travel agencies is contracted by both natural and legal persons who are going to establish a travel agency (retailers, wholesalers or retail-wholesalers).

 

What is the amount of the guarantee for travel agencies?

Generally, it will depend on the size of the agency:

  • For retailers the amount of the guarantee is € 60,101
  • In the case of wholesalers, the amount of the guarantee is € 120,204.42
  • Wholesaler-retailer, the amount of the guarantee is € 180,303.63

However, who has the last word here are the Autonomous Communities, that is why we can find different amounts in each Autonomous Community.

Catalonia: must be contracted with a minimum limit of € 100,000 and a maximum of € 300,000. It is 5% of the gross annual package travel billing.

Balearic Islands:  in the Balearic Islands it is not distinguished by type. They must contract a guarantee of up to € 60,000 up to a maximum of 6 establishments. From the seventh, with an increase of € 3,000 for each new establishment.

Canary Islands: a guarantee of € 60,000, without limit of establishments.

These are the amounts that we have collected as of 11/15/2017. We always recommend asking also in each Autonomous Community what is the amount of the guarantee to present. If it is already confusing to follow the actuality of the laws of a country, imagine when there are 17 different regulations.

 

How to provide the guarantee for travel agencies?

When we talk about endorsements, one word always comes to mind. Banks. It is true, the bank guarantee is an option, but it is not by far the best.

The possibilities, as in all types of guarantees, are practically reduced to two options. The bank guarantee or surety insurance. They are the two most used options by the vast majority of companies.
One of them for being the best known and the other, for being the most convenient.

Do you remember when at the beginning of the article we talked about the importance of expenses and financial conditions ?

Well, this is where we are going to teach you what not everyone knows: how to save money and how not to spoil your financial capacity in the future when you need an endorsement.

When we compare the bank guarantee vs the surety insurance, everything is very clear.

 

Bank guarantee vs surety insurance. Who wins?

  • Surety insurance does not compute CIRBE.  Therefore, the financial conditions of a possible future loan or credit will not be affected. Since that debt is not registered anywhere.

Here you have all the information about what CIRBE is . And a summary that I leave you here:

It is the place where the debts of individuals and companies are registered.

  • Forget about commissions with surety insurance. With the bank, you usually have to pay study fees, cancellation, or whatever you can think of. When we resort to surety insurance, in general, these commissions do not exist.
  • No notary fees . To formalize the guarantee, the normal thing is that the bank asks us to do it before a notary. If we opt for surety insurance this does not happen.
  • A bank guarantee usually involves the pledge of certain amounts, or even the full amount of the guarantee. What does this mean? Very simple, that money destined for the guarantee will be immobilized.

    Of course, it is not an interesting panorama. Imagine having € 60,000 in the bank that you can’t touch. With surety insurance, no amount is usually pledged. You simply pay the policy premium, and the rest of the money will be at your entire disposal.

If you opted for the bank guarantee, one more debt in your history, if you haven’t even started billing.

On our website specialized in Surety, we have a complete article on what Surety Sure is and what companies can use it for .

 
Opting for surety insurance is usually the most logical option, it no longer compromises your financial capacity in the future and is a cheaper option.
 

Liability insurance for travel agencies

Here there is not much to explain, the civil liability policies allow the agency to be covered against any claim from third parties in the normal development of the business.
You must cover the following three blocks of responsibilities, each with a minimum amount of € 300,000:

  • Civil liability for the operation of the business.
  • Indirect or subsidiary civil liability.
  • Liability for primary property damage.

Or, in other words, civil liability covers all types of claims: personal injury, material damage and economic damage caused.

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