Thursday, 28 March 2024
legislationNews

Cycling businesses exposed to Package Travel Directive legislation changes

A change to the Package Travel Directive came into force on the 1st of July 2018, changing the definitions of what a ‘package holiday’ is.

These are not only significant to the travel industry, but potentially to all businesses, clubs and societies, including those in the bicycle business.

Applicable to all sales made from the start of July, specialist cycling insurance firm Yellow Jersey explains:

A ‘package’ is now generally defined as the combination of two or more different types of Travel Services, which are combined for the purpose of the same trip.

There are now four types of Travel Services:

  1. Carriage of passengers
  2. Accommodation
  3. Vehicle Hire
  4. Any other service e.g. admission to a race/sportive, guided rides, rental of any sports equipment such as bicycles, wetsuits etc.

There are now six categories governing the circumstances in which travel services combine to create a package:

Category 1 – single contract (usual package scenario, where Travel Services are sold at an inclusive price).

Category 2 – sold in single booking process, where Travel Services from different suppliers are combined within one booking.

Category 3 – sold at an inclusive / total price, where Travel Services from different suppliers are combined within one transaction.

Category 4 – sold as a “package” (or under a similar term), where the words for instance “combined-deal”, “all-inclusive” or “all-in arrangement”.

Category 5 – contract allows subsequent choice, where a trader sells a product that allows a traveller to select different travel services after they have concluded the contract will also count as package.

Category 6 – sold through linked online booking process, where the traveller’s name, payment details and email address are sent from the first trader they purchase from to the second and a contract is concluded.

These changes close all loopholes when selling elements of travel separately. They also now embrace many firms who would previously have escaped the regulations, for example hotels, clubs, societies, event organisers and hospitality providers.

Why does this matter?

The Package Travel Directive regulations explicitly place liability for the performance of the travel services included in the package, on the organiser – irrespective of whether the travel services are performed by third parties. Liability is not only what we understand in Insurance terms but also means any lack of conformity and travellers will be entitled to compensation for damages and loss of enjoyment. Packages must be financially protected and consumers must be given statutory information.

Tom McMorrin from Yellow Jersey explains: “Many businesses are completely unaware that they “package”. They need to know that they are exposed to these new regulations. The consequences for failing to adapt their business to the new regulations is not only facing liability claims but now also a number of criminal offences.”

These include:

  • Failure to satisfactorily provide pre-contractual information
  • Failure to satisfactorily provide a contract or confirmation of contract and prescribed information
  • Failure to put in place compliant insolvency cover
  • Obtaining release of monies held on trust for insolvency cover by false statement
  • Failure to put in place compliant insolvency cover or provide pre-contractual information for LTAs

“At Yellow Jersey we can help explain the new Package Travel Directive regulations and how businesses can protect their exposures with tour operator liability insurance, professional indemnity and director and officer insurance,” concludes McMorrin.

Yellow Jersey has recently developed its specific insurance packages for bike shops and standalone mechanics. For more information, check in with our round up of the new cover here.