One of the big differences between insuring a hospitality business and other businesses is the need for innkeepers’ legal liability insurance. You have an obligation under the law to keep your guests’ belongings secure, safe, and in some cases, you may be held responsible for loss or damage. What’s more, because the legal requirements may vary depending on your location, your insurance needs can be complex.
Hospitality insurance may include commercial property, equipment breakdown, crime, business interruption, utility interruption, and food spoilage.
As a hospitality business, you are required to keep the personal belongings of your guests secure and safe. Innkeepers’ legal liability helps cover you against losses of your guests’ possessions when stored on your property.
If your hospitality business also includes a restaurant or bar, a liquor liability policy is a must-have. Offering valet services, either for the restaurant or guests lodging with you, creates another risk factor that requires attention. Airport and local shuttles are also popular amenities, but they also carry their own specialized coverage needs.
Use the yellow hot spots and explore how hospitality insurance can help protect against common risks.
Is your building subject to severe weather events, fire, or burst pipes? Most are. These situations and others can cause significant damage to the structure leading to costly repairs.
Building coverage protects the permanent structure from most weather perils, burst pipes, a fire, and other losses.
You are required by law to keep your guests’ valuable personal items secure and safe, and you can be held responsible for loss or damage unless caused by an act of nature or the actions of the guest.
An innkeepers legal liability policy can protect against losses to your guests’ personal items when they are being stored in your hotel. Requirements vary by state, including maximum liability per guest, the types of items that are covered, where the item was stored, and the value of the item.
Water on the floor, slippery entry in the winter, broken glass/hazardous debris, etc. These are all accidents waiting to happen that make your business susceptible. Claims may arise due to bodily injury, property damage, personal injury, and more.
General liability insurance is an absolute necessity for any business. It provides broad coverage when you are deemed responsible and liable, and will also pay to defend any covered lawsuit or action regardless of its merit.
Any establishment that sells, serves, or assists in the purchase or use of liquor is open to a liability claim as a consequence of someone getting inebriated to the extent that injuries or property damage result.
If you are in the business of selling or serving alcohol, it is critical that you protect your business from potential financial losses by being covered by a liquor liability insurance policy. Having the right policy in place could help cover your legal costs, court fees, and any civil or criminal damages stemming from an incident involving liquor.
Providing a valet service is convenient for your guests, but damaging a vehicle, property, or causing injury is a very real risk associated with it.
Obtain a general liability policy to protect your business from lawsuits by a third party. Be certain that a garagekeepers legal liability policy is in effect with adequate limits to cover any physical damage to your guest's vehicle or other vehicles on site. If you are using an independent valet service, obtain a certificate of insurance to verify they have the proper coverage with adequate limits. Also make sure that your business is named as an additional insured under their policy.
Hotels rely on technology to run almost every facet of their business and store sensitive information such as credit cards, passwords, and guests’ personal data. You are at risk if this information is lost, stolen, or compromised. You may be legally obligated to alert those impacted by the breach and possibly pay fines, restitution, and defense costs.
Experiencing a data breach is often not a question of if, but when. Securing a cyber liability policy can offer coverage for expenses associated with compliance regarding data breach notification laws, securing legal counsel to advise on incident response, credit monitoring service, and paying for regulatory defense, as well as penalties arising from privacy law violations.
Most states require an employer to provide coverage for any injuries their employees experience while on the job, as well as any job-related illnesses.
Maintain workers’ compensation insurance to provide benefits to eligible employees, otherwise, you can be penalized for every day that coverage is not maintained, as well as for any benefits an employee would have been eligible for in the event of a job-related injury or sickness.
On average, it’s estimated that three out of five businesses will be sued by their employees. Hotels, just like any other business, are vulnerable from the pre-hire process through to a possible reduction in workforce. Claims can stem from just about anything, such as someone taking a “joke” the wrong way and being offended.
Coverage to protect you against this risk normally comes as a standalone policy. The right coverage is critical to your risk management process as it protects against discrimination, wrongful termination, sexual harassment, and other employment-related allegations. Typically, the policy will cover your business as well as your directors and officers. Third party coverage is an added option, usually accomplished via a policy endorsement, and addresses claims made by customers or vendors against you from acts committed by employees.
When you own or operate a vehicle for your hotel, you expose your business to liability risks to other drivers, property owners, and your own guests while being driven.
A business auto insurance policy should be maintained if the vehicles are owned by the company. If employees are using their own vehicles at any time as part of their job duties, then hired and non-owned auto liability coverage should be maintained. Both will defend you if you are named in a lawsuit as a result of an employee getting into an accident while working for you.
What would you do if a fire impacted your operations? Or what if a pipe leak caused an extended downtime of a significant block of rooms? These and other events can destroy your ability to serve guests and bring in revenue, which can have a major long-term impact on the viability of your hotel.
Business income insurance compensates you for lost income if the business cannot operate as normal due to damage that is covered under your commercial property insurance policy, such as fire or water damage. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the incident not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.
What happens when your business faces a large liability loss that exceeds the basic limit of your standard policy?
You should consider purchasing a commercial umbrella insurance policy which provides higher limits, typically between $2,000,000 and $10,000,000, and often broadened coverages. Coverage is extended over various policies, including general liability insurance, business auto, and directors and officers liability insurance.
In the hospitality industry, like most industries, you have to be able to serve your guests in order to remain profitable. What would you do if you were not able to rent out rooms due to a fire or another covered loss? Business income insurance may protect you in the case of lost revenue. Understanding this risk and your operation’s specific needs can mean the difference between staying in business or not after a disaster.
Hotels, motels, inns, and bed and breakfasts need a whole host of coverage options that are common to most businesses, such as cyber liability, general liability, workers’ compensation, and employment practice liability insurance, among others.
Want to learn about the benefits of hospitality insurance for your business? Contact us to learn more about your needs and coverage options.