Running a business requires oversight because of your responsibility towards your customers. In the hospitality business, this responsibility becomes even more compounded. The hospitality industry caters to many personal needs of customers. Therefore, risks are often high.
Hospitality businesses need insurance that protects their assets and their customers. Should an accident or hazard, then hospitality insurance might help cover lost costs.
What is the Hospitality Industry and Hospitality Insurance?
The hospitality industry is very wide ranging. In general, it covers industries that cater to the convenience or tourist needs of the public. The industry can encompass hotels, restaurants, country clubs, attractions, travel agencies and other pleasure activities.
Should a hazard strike your business, it could result in a closure or a loss of income. Hospitality insurance can cover many common hazards associated with operations and clients. Therefore, the business can more easily recover from a problem.
Examples of Hospitality Coverage
Since the hospitality industry is very broad, its insurance coverage is also. Hospitality insurance falls under the general category of business insurance. Business insurance is rarely comprised of a single policy. Hospitality businesses often buy multiple policies to better cover their unique risks.
When you start to look for hospitality coverage, consider the common business insurance policies. They can often help you comprehensively insure your operation.
- Commercial Property Insurance: All businesses want to insure their personal property. In the hospitality industry, this may include inventory, buildings, equipment and other operational items. Commercial property insurance might cover property losses that a hazard causes to guest possessions. However, guests usually have more coverage under general liability coverage.
- General Liability Coverage: Every time a guest enters your property, you pose a risk to that guest. Should a guest get hurt or sick because of an incident in your business, they could face medical bills, lost income and other ramifications. Liability insurance can help protect the business from injury or property damage sustained by patrons. Should the customer need compensation, or even sue the business, liability coverage might help the business afford the payments. Personal property coverage for guests often falls under general liability coverage as well. However, make sure your policy makes proper allowances for this coverage
- Workers’ Compensation: Just as guests might face injury risks in your business, so will your employees. Should an employee get hurt or sick from a job-related accident, they likely have to take time off to recover. By law, you often have to pay qualifying employees workers’ compensation. Workers’ compensation can help the employee afford medical treatment and make up for lost income in the event of a prolonged recovery. Therefore, workers’ compensation insurance can help the business pay the employee without acutely compromising its own finances.
- EPLI: EPLI stands for Employment Practices Liability Insurance. Almost every workplace has to abide by certain employment rights laws. Should an employee allege unfair treatment, like discrimination, they might sue the business. EPLI coverage can help you cover costs associated with fighting these claims.
- Business Interruption Coverage: Sometimes, a peril might cause damages that warrant temporarily closing the business. During this time, the business won’t be able to profit. However, you might need funds to sustain your capital, make business payments or compensate employees. Business interruption insurance might be able to help you sustain these costs.
- Commercial Auto Insurance: Many hospitality businesses operate vehicles. Hotels may operate shuttles, or restaurants may use catering trucks. If you operate a vehicle for business purposes, a standard auto insurance policy may not provide enough coverage. Therefore, commercial auto insurance can better protect the risks of hospitality businesses. They often provide higher coverage levels than the standard policy.
- Cyber Liability Coverage: Hospitality businesses likely use computer network to store critical client information. However, computer systems, regardless of security systems, are never totally secure. Should your company lost data, or experience a cyber threat like a hack, this could expose sensitive customer data. Cyber liability insurance can often provide financial resources to help you control and fix damages. It might also assist customers in protecting their identities.
- Directors & Officers Insurance: This insurance offers reimbursement, payable to the directors and officers of the company, for losses of defense costs as a result of legal action brought against the directors and officers of the company.
How Hospitality Insurance Can Help You
Should your hospitality business face a hazard, damage or injury claims, insurance can help you meet your legal and financial obligations. The right insurance can help the business avoid undue hardship because of an otherwise unavoidable or unpreventable accident.
It can also help you in another way. In many cases, businesses have a legal responsibility to provide safe workplaces for their employees and services for their guests. States and localities often require businesses to carry various forms of insurance to guard their financial and personnel risks. Therefore, carrying the correct hospitality insurance can help you operate lawfully, not just safely.
Brian Wyles is a Vice President at Bouchard Insurance. Brian manages commercial insurance programs (property, casualty, workers' compensation, and employee benefits) for companies with 50 to 5,000 employees. | Connect on LinkedIn