Why you really need Hospitality and Hotel Insurance

What is hospitality insurance?

Hospitality insurance is an insurance package that covers businesses in the hospitality industry. Hotel insurance and food catering insurance are types of hospitality insurance.

According to IBISWorld, there are more than a hundred thousand businesses in the hotel and motel industry. With the increase in the number of people traveling, the growth of the industry is inevitable. People on vacation chill by the hotel pool without a care in the world. What could go wrong, right? Short answer – many things. Hotels and motels are prone to several accidents and mishaps therefore, hotel insurance exists.

The catering service industry is another industry that is booming. Catering services are commonly used when hosting a party. Independent catering companies and restaurant private dining caterers ranked in the top three in the catering industry in terms of revenue according to Statista. These caterers are liable for any damages they cause during such events, which is why they get catering insurance.

What are the risks in hotel & catering industry?

Dire fires:

Surrounded by open fires and sharp knives, employees in the food industry are vulnerable to many risks. Businesses with commercial kitchens spend more than $200 million a year on property damage. According to a food and dining site, Eater, the damages were mostly due to grease fires, gas leaks, and faulty wiring,

Drowning incidents:

Even in the presence of lifeguards, drowning can happen within a few seconds. According to the Centers for Disease Control and Prevention, drowning is the fifth leading cause of unintentional deaths. However, it is the second leading cause of death for children of age group 1 to 14 years. Swimming pools in hotels can be the cause of such alarming dangers.

Dram shop liability:

Drinking and gambling are why people go to casinos. Despite having a good alcohol management plan, casinos fall victim to damage or bodily injury claims caused by drunk patrons. A Casino Drink Policies report on Florida International University’s Digital Commons suggests that casino dram shop liability poses a massive problem for the establishments. They found it is due to the tradition of complimentary drinks coupled with the size and layout of most casinos.

Who needs this insurance?

The hospitality industry is definitely booming. It’s quite common to see new types of businesses popping up in the industry. However, some common businesses that need hospitality insurance coverages are as follows:

Hotels
Motels
Resorts
Casinos Hotels
Floating Hotels/ Hotel Ships
Caterers
Bed and Breakfasts

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What policies do businesses in the hospitality industry need?

If your business is on the list above, you will need to consider some coverage options such as:

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Business Owner's Policy (BOP):

For any business, the business owner’s policy (BOP) is a must. It is usually a combination of business interruption policy, commercial property, and commercial general liability.

This could be a valuable policy that covers most of your risks within your hotel, motel, or casino or during a catering event since it covers:

Business personal property and equipment breakdowns
Loss of income due to damage to the business’ property
Personal and third-party bodily injury

Workers’ Compensation Insurance:

Workers’ compensation insurance covers medical expenses or reimbursement of lost wages to the employees due to an on-the-job accident.

From knife slips to ladder falls, employees make mistakes and fall prey to unpredictable accidents during catering events. Your catering business is liable to pay the medical costs and reimburse the employee for the loss of wages. Therefore, adding this policy to your catering business insurance is a must.

Commercial Auto Insurance:

If your business owns a vehicle for business purposes, commercial auto insurance is a requirement. It bears the cost of third-party claims on bodily injury and damage of property.

Hotels usually own vehicles to pick up and drop off their guests while caterers’ own vehicles that transport their food. In the event of an accident, the business will be liable for any damage caused to all parties involved. This may be included in your catering trailer insurance. Some caterers even opt for mobile catering insurance since they operate from their vehicles.

Commercial Property Insurance :

Commercial property insurance covers damages to business-owned properties caused by perils such as vandalism, fires, theft, explosions, and burst pipes. This policy provides equipment breakdown coverage for your business.

Casinos and hotels attract affluent people willing to spend, and they also attract thieves. While casinos see a lot of incidents of cheating; HG claims there are more accounts of theft than any other crime. Therefore, commercial property coverages are a must for your hotel business insurance.

Commercial General Liability Insurance:

Commercial general liability insurance (CGLI) covers third-party damages caused by the operation or within the premises of the company. The policy covers claims such as bodily injury, property damage, and defense against legal actions.

Caterers usually operate in different hotels and event locations. Any damage caused by servers during an event could get the company in a messy lawsuit. For instance, if a server breaks a one-of-a-kind vase, CGLI could prove to be a big help.

Event insurance coverages can also come in handy for damages that CGL doesn’t cover during the hotel events.

Employment practices liability insurance:

Employment practices liability insurance (EPLI) covers any claims against the business for illegal practices, including wrongful termination, sexual harassment, and discrimination. This policy is also known as employers’ liability insurance.

Due to a simple misunderstanding, employees could file a case and hold your establishment liable for such illegal practices. EPLI covers claims in these scenarios.

Cyber Liability Insurance:

From cyber theft to data breaches, cyber liability insurance covers all risks of technology usage in a company.

Hotels, motels, caterers, and casinos depend mainly on technology to keep track of guest information and enter payment details. Deloitte’s US Travel and Hospitality Outlook claims that in 2017 the hotel industry earned $185 billion in revenue. It’s quite apparent why the industry would be vulnerable to cybercrimes. Therefore, you may want to add a cyber liability policy to your hotel insurance programs.

Umbrella and Excess Liability:

Commercial umbrella insurance extends the liability coverage over the conventional liability policies, such as commercial auto, property, and general liability.

For example, if a guest in your cruise ship falls and suffers from a brain hemorrhage, the claim may exceed the limit of your commercial general liability. In this case, getting an umbrella coverage helps in covering the remaining charges.

Liquor Liability Insurance:

According to the dram shop law, businesses that sell alcohol are liable for any damage or injury drunk patrons cause. Therefore, such companies require liquor liability coverage, also known as dram shop insurance.

One of the most profitable restaurants, Tao Las Vegas, earns 75% of its income from alcohol sales, according to Chron. Despite the high revenue opportunity, liquor liability can be a considerable risk for your hotel.

Pollution Legal Liability Insurance

There are countless environmental risks associated with owning, developing, constructing, and operating a facility. For these risks, pollution liability insurance covers claims from third parties against bodily injury or property damage.

Hotels, motels, and casinos commonly purchase pollution legal liability insurance to protect them from mold and air quality claims. The policy covers the cost of investigation, remediation, business interruption, and defense against legal claims.