A hotel business has three fundamentals. The first is your property/premises, the second your staff and guests and third is your income. Keeping these three things safe should be at the heart of a hotel insurance policy. Protection for your property comes under the buildings and contents insurance and should someone get hurt you have public and employers’ liability insurance. To protect the income you take from your business there is also business interruption insurance. From then on everything else becomes much more dependent on the different requirements and services you may offer.
Hotel Insurance Features Explained
Public Liability – Liability insurance for a hotel is to compensate loss, damage or injury to 3rd parties and their property. The hotelier is ultimately liable because it’s their responsibility to oversee that their property is adequately maintained. For example, a guest slips on a wet floor in your entrance hall. You could be held liable in a compensation case if they are injured.
Employer’s Liability – This is a legal requirement for any employer and is usually offered at £5m as standard. Employers’ liability insurance guarantees you have access to adequate funds should you need to compensate a member of your staff for an injury or damage from a situation you, as their employer, are liable for.
Buildings Insurance – The Rebuild Cost – A hotel is reliant on the premises and is most likely the most expensive asset. Buildings insurance exists to cover the costs for repairing damage right through to rebuilding – should it need. You should insure yourself for the full re-build cost of your property. Make sure you factor in any outbuildings, boundary walls, pools, fitted kitchens and bathrooms etc. as well as the building itself.
‘Condition of average clause’ – This means that if you give a sum insured for building/contents which is not enough, they can reduce the claim by the percentage that you’re
underinsured. For example – insure for 100K, but should be 200k, and claim for 50k. You could end up being able to claim only for 25k.
Business interruption – Business interruption insurance pays your outgoings such as pay your rent, wages and all necessary over-heads if something happened to stop your business trading. If buildings and contents insurance cover your assets, business interruption is the life support that sees you through until they are up and working again.
Indemnity Period – Should the property become uninhabitable the indemnity period is the length of time ‘business interruption’ can be claimed for. How long should my indemnity period be? 24 months is often the standard on a hotel policy. When working out your indemnity period, don’t underestimate the time it takes for demolition and debris clearance, architects and planning and then rebuilding.
Contents Insurance – A great way to understand the difference between your ‘contents’ and your ‘building’ would be to (hypothetically of course) tip your hotel the wrong way up. Anything that would fall is considered contents. This would mean furniture and decorations are contents but the walls, ceiling and kitchen cabinets come under buildings insurance. For a hotel this obviously makes the contents extremely important. Guest contents – Your guests are the life (and soul) of your business. Guests’ contents insurance for your hotel means that their belongings are protected in the event of a theft, fire or other insurable event. It’s also a legal requirement in line with the Hotel Proprietors Act 1956. The amount of cover you need here obviously depends on the capacity of your hotel; an advisor can go through this with you so you are comfortable you have the correct level of cover.
Further additions can be made to your policy to cover those things that are specific to you namely swimming pools , entertainment etc.