Travel Agent Bond Claims Guide

A Travel Agent Bond (sometimes known as a Seller of Travel Bond) is required in five states for agencies that provide prearranged travel or tourist-related services such as tour packages or vacation certificates.

Such surety bonds are required by state regulators as a way to ensure that the terms and conditions of the applicant’s license will be followed. Should a regulation violation be committed, the bond will act as a means of restitution by covering any financial losses that have been incurred by the damaged party.

Jet Insurance Company provides the Seller of Travel Bond to act as a form of financial assurance to the obligee (governing state regulator) by guaranteeing payment for justified claims. In addition, our team at Jet provides protection to the principal (licensee) as well by reviewing the legitimacy of all claim accusations before payment may be fulfilled.

To ensure our customers are aware of what a claim stems from, let’s go over some license regulations and what to do should a claim be pursued.

How to Avoid Claims on a Seller of Travel Bond

A travel agent or travel agency must comply with the licensing regulations that are instilled by their local state regulator. These rules are put in place to ensure that the customer, as well as the obligee, are protected from financial damages.

Below you will find a list that includes common actions that may lead to a Seller of Travel Bond claim.

• Misrepresentation
• Financial failure
• Breach of contract
• Failure to allow for cancellation and reimbursement
• Unlawful use of a brand or trademark

It is important to note that this is not a complete list and a review of the regulations that apply to your specific license is highly recommended.

Seller of Travel Bond Claim Process

Before a claim may be filed upon a Seller of Travel Bond, a few steps must be taken. In most cases, the damaged party is typically required to first file an official complaint with the state regulator. Once this has occurred, the licensee will be notified of the complaint and generally given a chance to resolve the problem.

In cases where the licensee is unable or unwilling to resolve the complaint, the damaged party has the option to pursue a bond claim. Depending on state regulations, a bond claim may be filed upon a Seller of Travel Bond through the obligee on behalf of the claimant or by the damaged party themselves by pursuing civil action against the licensee. If the claim accusation is found to be justified in either scenario, an official claim notice may then be sent to the surety provider (Jet).

Regardless of the obligee or court’s decision on the validity of the bond claim, Jet will begin a review and investigation of the allegation once the claim notice is received—the principal (licensee) will be asked to provide all available information and documentation regarding the case. If the Jet team determines that the claim is indeed justified, payment will be made to the affected party (claim payouts will never exceed the bond amount).

Recovery and Indemnification

It is often assumed that a surety bond is a form of insurance. However, this is not the case. A surety bond, such as the Seller of Travel Bond, is more like a line of credit. Once a claim has been settled, the amount of the bond that was provided for such payment will need to be paid back. This means that the licensed travel agent or agency owner will be expected to reimburse Jet (or any surety company that provided them with a bond) for the full claim amount that was fulfilled. Failure to do so will lead to difficulties obtaining a new surety bond in the future. 

Bond Claim Timelines and Limitations

Who Can File a Claim on a Seller of Travel Bond?

Anyone that has been financially damaged by the principal, whether it be the obligee themselves or a customer of the travel business, can file a claim on the Seller of Travel Bond. However, claims may only be pursued for actions performed while the surety bond is active. This liability period includes the mandated cancellation timeline (whatever is stated on the bond form) as the bond technically remains active during this window of time. Once the bond term has officially expired or been canceled, no further claims may be filed.

Are There Limits to Claim Filings?

In addition to when a claim may be filed (as stated above), claim payments are limited by how much may be awarded to the damaged party. Meaning that claim payouts cannot exceed the amount of the bond (such limit is represented by the surety bond’s dollar amount). Seller of Travel Bond limits are typically custom and determined by the obligee. This information can either be found on the bond form itself or in the state legislation.

Rules and regulations vary in each state, so the Jet team has provided details regarding past research completed on travel agent and travel agency-related bonds, as well as links to legislative documents. See the chart below.