Just as their Florida colleagues begin to batten down their hatches against Hurricane Irma, Houston travel agencies and home-based agents are only now starting to assess the full damage to their businesses from the devastation they faced from Hurricane Harvey.
As they run through their checklist for rebooking clients, and protecting their storefronts and home offices, agents should be examining their business insurance policies and “business continuation” plans to better understand how they could continue to operate in the face of a downturn or interruption.
Who’s got your back?
Home-based agents and independent contractors need to ensure that clients can be cared for, said Stephanie Lee, founder of Host Agency Reviews.
That means having a strong network, either through fellow agents who can access your clients’ PNRs, or a 24/7 hotline service. “It’s like that ASTA saying, ‘Without an agent, you’re on your own.’ Well, without a network, you’re on your own too,” Lee said.
Lee noted how host agencies often have access to services like Agent 24 at a reduced rate. “And hosts can staff their agencies and reach out ahead of time to independent agents to help them if they are in the path of a severe storm.”
Also, Lee said that part of the storm preparedness network is building a strong customer relationship management database that an agent can use to be proactive with clients traveling during a storm.
“In a crisis like a hurricane, you really can’t waste time trying to find out who is traveling, where, and what might need to be done for them,” Lee said.
Keeping the income, incoming
In the event of a city- or region-wide catastrophe, agents need to understand how long they can keep their doors open without a steady income. Most business insurance policies won’t help most agents, experts said.
In Houston, Dominique Renaud, owner of Houston Business Insurance Agency, Inc., said business owners may be surprised to find that they cannot make claims for property damage or “business income,” as a result of the disaster there.
“Not enough people ask about business income coverage. But what they don’t realize is that shutting down, even just for a couple of days, can be damaging to a business,” Renaud said.
“When I talk with clients I ask them, ‘what is a typical month like with salaries and expenses,’ so I can determine how much coverage they will need. Then, when they file a claim I send them a check, and they pay themselves and their bills,” said Renaud, in business since 1990.
Most small business insurance plans don’t provide that type of coverage. “There are some plans out there you can buy that will give you business income coverage for situations like this. But there are complex terms and conditions, and limitations, and this is not your regular business insurance,” he said.
Also, a business typically needs to suffer direct damage to its physical plant. “If you don’t have direct damage from things like wind, fire, a tornado. it gets complicated.”
Companies in Houston are finding that if their business only had water damage from the flooding, they won’t be covered. “If your home or apartment building is still standing, then it wasn’t a wind event, and you’re not covered by insurance,” Bowen said.
What if your clients don’t understand?
While most agents would hope a customer would be sympathetic to events like a 500-year flood, that sympathy might not leave them fully protected.
“In most cases the agents are acting as agents-at-law and, if they disclose that fact along with the name of the principals who are actually providing the transportation, etc., they cannot be held liable for non-performance by the suppliers,” said Paul Ruden, an attorney and former general counsel at the American Society of Travel Agents.
But what if something prevents an agent from getting a client’s deposit in on time?
“An agent’s best bet is a full disclosure/force majeure contract with the client,” Ruden said.
“But I doubt most agencies have or would want to have a written agreement with each client with clauses saying the agency is not responsible in this, that or the other situation, although such agreements can easily be formed using email forms,” Ruden said.
Absent an agent-client agreement, “the agency is left to argue that its performance was prevented by circumstances beyond its control,” Ruden said, but that might not be a “reliable approach.”