What Hotel Insurance do I need?
Business in the hotel industry can be precarious. Local events for out-of-towners, currency fluctuations, inclement weather, the health of the economy and the affordability of travel all influence hotel occupancy rates. Despite everything you do, a certain degree of fickleness remains.
You face a challenging, inconsistent industry. Do not crumble in the face of instability—fortify your business operations by purchasing a comprehensive hotel insurance policy.
What is usually covered on Hotel Insurance?
The hotel industry is diverse. Hotels can have just a few rooms or they can have hundreds. Accordingly, hotel insurance policies are usually composite, consisting of several core covers and a variety of industry-specific and optional covers. Insurers will typically include the following covers in their core hotel policies:
- Buildings insures property such as the hotel, annexes, small outside buildings, walls, gates and fences, and pays rebuilding expenses.
- Contents covers items within hotels such as furniture, furnishings, equipment, stock and machinery in the event of loss or damage.
- Employee protection pays expenses associated with your employees’ death, loss of limb(s), loss of sight, temporary total disablement, and clothing and personal effects damage resulting from employees’ usual work responsibilities.
- Business interruption recoups any loss of business income due to damage covered under your contents or buildings cover.
- Business liability contains employers’ liability (required if you have employees), public liability (insures against liability for third-party injury or damage), products liability (covers costs associated with injury due to faulty products your hotel distributes, such as shampoo) and guests’ property liability (including motor vehicles in hotel garages or car parks which are securely locked overnight).
- Legal expenses helps pay the costs associated with defending or pursuing certain legal actions such as contract disputes, employment disputes or criminal prosecution defence.
What cover can is also offered on Hotel Insurance?
Core covers may be supplemented with substantial optional covers to accommodate the various members of the hotel industry. Many of these optional covers are specific to the industry. This list is only a small sampling of the available optional covers:
- Cost of obtaining alternative accommodation for guests
- Guests’ and customers’ personal effects and valuables
- Full theft
- Loss of attraction
- Environmental liability
- Notifiable disease cover
- Computer breakdown
- Equipment breakdown
- Employee theft
- Contractors’ all risks
What is typically not covered on Hotel Insurance?
Despite the inclusive nature of hotel insurance policies, there are still exclusions that insurers will generally not cover due to a variety of reasons, including excessive risk. The following is typically excluded:
- Stock shortages
- Computer or data processing equipment operator error
- Computer virus or hacking
- Terrorism (some cover available as an optional extra)
- Theft of goods while in transit unless the vehicle is securely locked
- Theft by the insured or resident manager (or member of their family)
What areas require insurance cover within the hotel industry?
Owning and operating a hotel can be a rewarding endeavour. However, hotel operators have to manage numerous exposures related to lodging, and many offer amenities—including pools, exercise facilities, bars and restaurants—that can dramatically increase the number of insurable risks. The list below provides an overview of these hotel risks and more, helping you identify potential blind spots in your risk management and insurance programmes.
- Due to the volume of valuable items and equipment found in hotels (eg bedding, furniture and decorative artwork), property exposures in hotels are numerous. Complicating matters, property damage can be caused by a variety of factors, including equipment failures, plumbing issues, poor wiring, natural disasters, guests, employees and other third parties. What’s more, water damage and fires have the potential to affect multiple rooms and storeys, increasing costs and interruptions for your business.
- To ensure the comfort of its guests, hotels depend on functioning equipment. In the face of equipment breakdowns (eg power outages and appliance malfunctions), hotels can experience business interruptions or even prolonged closures. In fact, equipment breakdowns can lead to major property damage should an appliance leak or start a fire.
- Crime can be a challenge for hotels, especially as employees, guests and suppliers all have the opportunity to steal from you. To make matters worse, thieves can strike at any time, leaving owners to recoup any lost funds or valuables. Thieves do not need direct access to cash to steal from you—equipment and supplies are all fair game. What’s more, in the event that a guest is the victim of a theft, you could be held responsible for the damages.
- Depending on their size, hotels may have to manage the safety of hundreds of employees and guests on a regular basis. Because of the high number of individuals entering and exiting your hotel, public liability exposures are significant and, when injuries occur at your business, you could be held responsible. Accidents related to slips, trips, falls, exercise equipment, swimming pools, balconies and unauthorised access to your building are common and major sources of concern. Something as simple as a wet floor or an uneven surface can lead to costly insurance claims following an incident.
- If your hotel has an on-site restaurant, gift shop or offers room service, food and products liability can be a serious concern. The potential for food poisoning, contamination, injury, spoilage and allergic reactions is ever present, making continued guest safety a challenge. In the event that one of your guests becomes ill due to your food, or accidently ingests a foreign object found in one of your menu items or vending machines, your hotel could face legal ramifications and suffer irreversible reputational damage. What’s more, hotel owners must account for the potential danger of gift shop items.
- It’s increasingly common for victims and their families to file liability claims against hotel restaurants or bars for their role in serving a customer who is then involved in an alcohol-related accident. Making matters worse, all it takes is a single claim to put your entire business at risk. These exposures can stem from selling spirits to underage individuals, overserving customers and non-compliance with applicable legislation.
- The hotel industry is a common target for cyber-criminals, as these businesses often store sensitive customer data (eg names, addresses and payment information). In addition, employees who are improperly trained on computer and data safety could put your organisation at risk for ransomware, viruses, phishing scams and malware. Compounding your exposures, many hotels offer guest wi-fi that—if improperly secured—can put you and your guests at risk of an attack.
- Continuity is critical in business, and there are few things more important than continuous revenue and cash flow, particularly for small to mid-size organisations. In fact, just one brief business interruption can be incredibly costly for an organisation, often leading to serious reputational damages or long-term closures. Common interruptions for hotels can include natural disasters, fires, leaks, cyber-security events and vandalism.
- Depending on the services your hotel offers, employees may be required to operate a vehicle on behalf of your business, creating motor vehicle exposures in the process. While important for daily operations, the improper use of a vehicle can lead to potential accidents and major insurance claims. What’s more, if you allow employees to use their own vehicles for work, standard commercial motor policies are often not enough. Additionally, providing valet parking can also create unforeseen challenges should a customer’s vehicle get damaged.
Bespoke Hotel Insurance is Best
A bespoke policy is best to make sure your specific risks are acknowledged and minimised. We can tailor a policy that fits your individual needs.
For More Information on Hotel Insurance
While the proper risk management practices can reduce certain exposures, no system is 100 per cent effective in ensuring an incident-free workplace. As a result, it’s all the more crucial to work with a qualified insurance broker to not only assess your exposures, but secure the appropriate cover as well.