Owning and operating a hotel can be a rewarding undertaking. However, it does not come without its fair share of risks. Hospitality businesses can face several liability risks, including bodily injury, property damage to guests, hospitality errors and omissions while serving guest. In addition, cyber security threatens your clients’ personal and financial data. If you own and operate a hotel, motel, inn or resort, be sure that you have the correct amount of hotel insurance to cover all your needs. Let’s take a look below.
What exactly is Hotel Insurance?
Hotel insurance is designed to protect hospitality businesses from the risks they face, such as third-party bodily injury or property damage lawsuits and other exposures. The Canadian hospitality industry is a large, diverse segment. There are more than 8,000 hotels, motels, and resorts in Canada, employing more than 300,000 people. Hotels are responsible for generating approximately $21.9 billion in spending on overnight stays annually. An insurance policy exclusively tailored for hotel operators is critical for protecting your assets and property from a broad range of risks, including third-party liability.
Hotel risks and exposures
If you are a hotel operator, you have to manage numerous exposures related to lodging, and many other amenities that can drastically affect your exposure. These insurable risks include:
- Pools
- Exercise facilities
- Bars
- Restaurants
- Daycare
Resorts, motels, bed-and-breakfasts, inns, Airbnb rentals, and hotels all need to understand their risk exposures. Identifying potential blind spots in your risk management and hotel insurance plans is critical to get the coverage you need. Eliminating anxiety about these sorts of incidents can help give you greater piece of mind. Let’s take a look at the types of hotel insurance you need in your policy:
1. Commercial Property Insurance
When you own a property of any kind, your building is subject to a number of uncontrollable hazards. In the event that a fire starts that later destroys your guest’s belongings or requires hotel room repairs, the replacements will be quite expensive. A commercial property insurance policy helps cover those costs. Filing a claim after an accident can aid you in providing funds to guests and repairs to the hotel itself. Property damage due to fire, lightning, storm and explosion are typically covered, whereas earthquake and critter damage is not.
2. General Liability Insurance
Personal injury claims can be expensive to settle or fight. If a customer slips and falls in the hotel lobby or by the pool, you may be liable for damages. When you have general liability coverage, you can cover legal and settlement costs associated with non-professional errors, similar to and including slip and fall accidents.
The most obvious gap you may have is simply the end of your coverage limit. You may have $1 million in General Liability coverage, but can experience a big claim for $3 million in damages. After court costs, paying the price of medical services, and punitive damages, claims in the millions are not that uncommon. In this situation, you will need Commercial Umbrella coverage, also called Excess Liability. This policy sits over your existing liability coverage and, if a claim exceeds it, pays the difference.
3. Professional Liability Insurance
Your employees are expected to provide exceptional service to customers. If an employee accidentally charges a customer the wrong amount, that customer may choose to file a legal claim. They may insist that the issue caused significant distress and damage. As the hotel owner, you can protect yourself from any errors or omissions with professional liability insurance, which covers costs associated with professional errors or mistakes.
4. Food and Product Liability Insurance
If your hotel has an on-site restaurant, gift shop or offers room service, food and product liability can be a considerable 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 accidentally ingests a foreign object found in one of your menu items or vending machines, your hotel can face legal ramifications and suffer irreversible reputational damage. What’s more, hotel owners must account for the potential danger of gift shop items.
5. Liquor Liability Insurance
Lawsuits related to liquor liability are filed each day. It’s increasingly common for victims and their families to file suits against hotel restaurants 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 liquor liability claim to put your entire business at risk. Liquor liability exposures for hotel owners can stem from selling liquor to underage individuals, over-serving patrons and non-compliance with applicable legislation.
A general rule to keep your insurance premium reasonable is ensuring that no more than 40% of your sales derive from selling alcohol.
6. Business Interruption Insurance
Continuity is critical in business, and there are few things more important than continuous revenue and cash flow, particularly for small to medium-sized organizations. In fact, just one brief business interruption can be incredibly costly for an organization, 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.
7. Commercial Automobile Insurance
Depending on the services your hotel offers, employees may be required to operate a vehicle on behalf of your business, creating automobile 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 auto policies are often not enough. Additionally, providing valet parking can also create unforeseen challenges should a customer’s vehicle get damaged. That’s why you should ask one of our isure representatives if a commercial automobile insurance policy is necessary.
8. Cyber Security
As a business that deals with a large amount of personal customer information, protecting yourself in a case where data is breached or leaked is essential. If there is a data breach and private information is leaked, customers may take legal action. Even if sensitive information isn’t leaked, you will need to replace software, hardware or conduct an investigation. With cyber liability insurance, all these costs may be covered by your policy.
General Liability Insurance excludes coverage for data-breach-related liability claims. So, if your business stores customer data, you’ll want to consider a separate cyber liability insurance policy.
9. Equipment Breakdown Insurance
To ensure the comfort of your guests, your hotel depends on functioning equipment. Should you experience equipment breakdowns, such as HVAC system failures, power outages and appliance malfunctions, it can be costly. You may even experience business interruptions or a prolonged closure. What’s more, equipment breakdowns can even lead to major property damage should an appliance start a fire.
10. Crime Insurance
Crime is a real problem for hotels. Your employees, guests and vendors all have the opportunity to steal from you. To make matters worse, thieves can strike at any time, leaving you to recoup any lost funds or valuables. Thieves steal cash, supplies, and even equipment. Additionally, in the event that one of your guests is the victim of a theft, you can be held responsible for the damages. Commercial crime insurance is a form of risk management that protects a business from the loss of property, money or merchandise that business-related crimes may cause. It allows the company to file claims following the occurrence of criminal offences that have the potential to ruin the business financially, such as security theft, robbery, embezzlement, forgery or other similar crimes.
11. Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) provides coverage for claims related to employment practices, such as discrimination or wrongful termination. If an employee files a lawsuit against your restaurant, your EPLI policy can help cover legal fees and other related expenses.
Hotel Insurance: Choose the best
At isure, we offer specialized policies that deliver custom-tailored, all-in-one protection specific to the hotel and hospitality industry. We understand that every business has unique needs, and the liability risks they may face. We will discuss this in detail and present you with the correct information based on your requirements. Whether you want coverage for property damage, equipment breakdowns, crime, or liability, we’ve got you covered. Speak with an isure insurance broker today and create a comprehensive hotel insurance policy to protect yourself and your business from internal or external risks. Your guests shouldn’t be the only ones having a good night’s sleep!
