Hotel Insurance - What You Should Talk to Your Agent About
Common Hotel Insurance Mistakes that Could Devastate Your Business
#1 Your Agent or Broker is not an Expert in the Hotel Industry
An insurance advisor should be provide you with comprehensive coverages, tailor made for your Hotel Insurance needs. The more knowledgeable your agent is the more effective they will be in shopping coverages. Other agents may offer options that are less expensive – keep in mind that inadequate coverage is usually less expensive, but only until a loss occurs.
#2 You Did Not Prepare a Risk Management Strategy to Protect Your Hotel.
From accidents on the property to lawsuits to fires to employees who step over the line, there is seems to be an endless supply of risks in owning a hotel. However, many of these risk can be circumvented with minimal but through planning. In any case, it is much easier and cost effective to prevent a mess than it is to clean it up. Even with proper coverage –the cost of deductibles, increased future premiums, and the time lost dealing with the situation it is best to have systems in place that can prevent the loss rather than mitigate it after it occurs.
#3 You Did Not Check For Previous Losses When Acquiring a New Property
Many successful owners realize the business-savvy of expanding their operation – and buy one or more additional properties. If a property has a history of losses, insuring that property is much more expensive than a similar property without such a lengthy claims history. A property’s loss history is not always listed on the seller’s disclosure.
#4 You Ignored the Need for EPLI Insurance as Part of Your Protection Package
EPLI: Employment Practices Liability Insurance. This kind of insurance covers not only the employer’s actions but their employees as well. As a business owner, you can get sued for any indiscretions your employees commit – sexual harassment, etc. The minimum cost to defend yourself against a harassment suit is $20,000, and settlements are often in 6 figures.
#5 You Tried to Protect Your Hotel with Market Value Instead of Replacement Cost Insurance
A hotel owner in Texas recently insured his property for market value – at $1.7 million. When his 15 year old property was damaged, he was told it would take $3 million to repair the damages caused by the fire. He was $1.3 million short. Most of the time, market value coverages save money, but in the long run has the capability of putting you out of business indefinitely. If your hotel is destroyed, the most you can hope to receive from your insurance company is what the “market’ would pay if you were selling it.
#6 You Overlooked Business Interruption Insurance.
In the event of a loss – fire, flood or otherwise, at least a section of your hotel can become inoperable. Most of the time when this happens, even if you did not have to completely close your doors to the public, the likelihood of business booming while part of that business is under construction diminishes and your income drops to nothing. Business Interruption Insurance assists business owners during times of loss.
#7 You Did Not Make Certain that Your Agent or Broker had Enough “Markets And Volume”
In The Hotel Industry to negotiate The Best Price For Your Hotel Insurance. Markets and Volume simply put are the insurance companies that appoint agents who are experts in that company’s specialties and the amount of insurance the agent(s) appointed writes for that company. The best agent to go with is going to be one that has their pick of markets and supplies those markets with a sufficient amount on business – so they can negotiate the best price with the best company.
Swingle, Collins & Associates specializes in Hotel Insurance coverage. The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for real estate insurance, please contact your dedicated risk manager to discuss the benefits and services of commercial insurance coverage.
The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.