The hospitality business is quite vast, and is all about comfort and creating memorable experiences for your guests. Restaurants, hotels and bed-and-breakfasts are made for fun and relaxation – unless you’re the operator. If you’re in the hospitality business, you’ll need many types of coverage. In this article, we will take a closer look at what is unique about hospitality insurance, and which types of businesses should have it.
From hotels, bed and breakfasts, and restaurants to spas, gift shops, and golf courses, Hospitality Insurance is a customized policy consisting of various coverages to protect your business from financial losses and damages. If you are considering venturing into the Hospitality industry, it’s important to remember that comfort, pleasure, and satisfaction should always be your top priorities. However, no business is immune to accidents, losses, and damages. These may be the result of extreme weather, or third-party lawsuits. Therefore, it is important to get an insurance policy that will protect you and your business in any of these scenarios.
What should your Hospitality Insurance policy include?
Coverage provided by an insurance policy specifically prepared for hospitality can include property, crime, business interruption and liability, depending on the needs of your business. CGL may include product liability insurance to cover any product you manufacture, distribute, or sell, including food. Let’s take a closer look at some of these coverages:
1. Commercial General Liability (CGL) insurance
Commercial General Liability insurance, or CGL, covers third-party claims or lawsuits alleging bodily injury or property damage. Coverage encompasses incidents of physical injury, damage to property or some kind of reputational harm. In a nutshell, CGL insurance enables you to continue your normal operations while dealing with either real or fraudulent claims against your business.
If your establishment serves alcohol, you will also need liquor liability insurance. You can be held liable for damages and injuries caused by one of your customers if it’s determined the amount of alcohol they consumed at your venue was a contributing factor.
2. Commercial Property insurance
Commercial Property insurance (also known as Business Property insurance) provides financial support to pay for losses or damages resulting from a fire, hurricane, ice storm, earthquake or water damage. It can also help to cover your repair or replacement costs if your business property is damaged or destroyed as a result of a covered loss.
3. Business Interruption endorsement
Commercial property insurance may also include Business Interruption (BI) coverage. A BI endorsement covers damage to property, losses in income, and extra expenses that can occur. This type of insurance coverage can help you be prepared for the unexpected. It can help your business:
- Prevent loss of income if your business cannot operate
- Protect yourself from financial obligations that do not stop, even though your business is closed due to a loss, including bills and lease payments
- With extra expense coverage to pay for additional costs in excess of normal operating expenses, such as relocation expenses
Other types of coverage to consider in your Hospitality Insurance policy
4. Equipment Breakdown insurance
If you own expensive electrical or mechanical equipment, this type of coverage pays to repair or replace it if damaged by power surges, electrical shorts, or mechanical malfunctions. From computers and photocopiers, as well as your building’s HVAC system, you’ll have coverage for freezers, fridges, and kitchen appliances, as well. You must have commercial property insurance to add this protection to your policy.
5. Cyber Liability insurance
Your business will most likely have a website, a point-of-sale terminal, or accepts debit and credit card payments from your guests. It’s important to protect their private and financial data. Cyber liability insurance coverage protects against digital-based risks. It typically includes indemnification from lawsuits related to data breaches, such as Errors and Omissions (E&O). It also covers losses from network security breaches, such as ransomware or a phishing attack.
6. Commercial Crime insurance
Unfortunately, internal theft happens more than you might think. Commercial Crime insurance protects you against internal theft, fraud, and acts of employee dishonesty. It also covers the theft of money in transit outside of your business if stolen while making a bank run. You must have commercial property insurance to include this coverage in your policy.
7. Commercial Auto insurance
Also known as commercial vehicle or business auto insurance, it is a business insurance policy that applies to “autos owned by or used in your business.” It protects your business against liability for damages caused by accidents involving your business vehicles. Additionally, it provides certain compensation to occupants of your business vehicles who are injured in said accidents.
8. Legal Expense insurance
Significantly cheaper than the cost to hire and retain a lawyer, Legal Expense insurance includes coverage to get legal advice or hire an experienced lawyer for help with various issues. From employment or contract disputes, debt recovery, and taxation audits, adding this coverage to your overall policy is wise if you do not have a legal team or occasionally require legal support.
9. Building / Content insurance
Your assets – your building, inventory and equipment – can be replaced. But at what cost? When you’re considering whether or not you need property insurance, this is the question you must ask yourself.
10. Business Premises Liability
Business Premises Liability holds property owners legally responsible for injury when an unsafe condition causes injury to someone. The idea behind this type of coverage is that people should have a reasonable expectation of not getting hurt on someone else’s property.
11. Host Liquor Liability
If you’re just hosting a party for a few people over to your condo or apartment, all you need is condo or tenant insurance. You’ll want this for other reasons as well, such as coverage for your belongings or water damage. However, the Liquor Liability coverage is really what you need here.
12. Commercial Drone insurance
Drones are becoming an increasingly common feature of business for surveying purposes, aerial photography, inspection, farming and more. Commercial drone insurance covers damage to and loss of the drone, ground station equipment and drone-mounted devices, such as cameras, and spare parts.
What is the cost of Hospitality Insurance?
As businesses under the umbrella of hospitality vary, so too will the cost. Cost for coverage will depend on a variety of factors that insurance providers consider, including:
- Type of business
- Products and services you offer
- Business location
- Years of experience as a business owner
- Number of employees
- Annual and projected gross revenue
- Insurance claims history
What types of businesses need Hospitality Insurance?
There are many types of service-oriented businesses that need to protect their reputation, assets, and finances with a comprehensive hospitality insurance policy, including:
Food & Drink
- Bars, pubs, and lounges
- Bed and breakfasts
- Cafes, cafeterias, and restaurants
- Caterers
- Delis
Accommodations
- Cabins and cottages
- Campgrounds
- Hotels, motels, and inns
- Ski resorts
The hotel industry is full of assorted properties. It’s also full of diverse risks and exposures. Fortunately, Travelers Canada offers customizable solutions to hotels dealing with real-world risks. Their cross-border and global capabilities provide additional options for those who do business or have property abroad.
Vendors
- Gift shops and retail stores
- Concession stands
Attractions
- Art galleries and museums
- Dinner theatres
- Mixed-use recreational facilities
- Music clubs and venues
Recreational Activities
- Billiard halls
- Bowling alleys
- Spas and salons
- Golf courses
FAQs about Hospitality Insurance
Does Hospitality Insurance cover me and my business if an employee falls for a phishing or email attack?
If you have cyber liability protection as part of your overall policy, you’re covered! In addition to insurance coverage, proper training to spot phishing and cyber schemes is imperative.
Is my commercial cargo van covered for collision damage?
If you include optional collision or upset coverage as part of a basic commercial auto policy, you will have coverage for loss or damage if it’s determined you are at-fault for the accident. If you are partially at-fault or not at fault for a collision with another vehicle, the Direct Compensation Property Damage (DCPD) portion of your commercial auto policy is designed to cover the cost of damages.
What coverage limit is best for Commercial General Liability coverage?
You can choose between $1 million and $2 million worth of coverage for CGL, depending on the type of business you run. Most hospitality businesses err on the side of caution and select a $2 million coverage limit.
From spas and golf courses to gyms, restaurants and hotel properties, creating a memorable experience for your guests is essential. While taking care of your guests, it’s important to take care of your business and employees, as well. Hospitality insurance can offer several options to ensure that you can continue to do your best work without the stress of worrying about coverage. Contact one of our isure representatives today to help tailor the best combination of coverage for your business in the hospitality sector.
