Hotel Owner Insurance – A Guide On How to Insure
This is our first installment in the “How to Insure a…” series. Hotels have come long ways from the Inn days of the 18th century, and as a business owner, you need to be in the know about how to buy insurance for a Hotel, Inn, or Bed and Breakfast. Let’s get started.
How to Buy Insurance For a Hotel
First things first, if any of this is confusing for you or you simply want someone to talk you through the process, please feel free to give us a call. We have staff on hand that specializes in the hospitality industry and who write Hotel Business Owner Insurance every day. You can reach Rick Brewster directly at 972-490-2238 or by email at by clicking here.
Step 1 – Describe Your Business’s Activities
Look at your revenue stream for all of your income side. Categorize it by “type of service” and include a total at the bottom. Do you just offer lodging or do you have any additional line items that you receive revenue from? For instance, do you offer conference rooms for an added fee, do you sell internet services, does your business have a restaurant, a bar, do you rent out AV equipment, or offer spa services? Categorize both your income and employee payrolls in these “buckets” of activities. Now grab that brochure or look at your website and find that list of “perks” that you offer your guests. These additional line items could be anything from airport pickup/car service, housekeeping, pool/hot tub, an on-site gym, on-site security (employed or outsourced) or any other amenities. These lists your building will help your agent figure out exactly what you’re doing as a business, where you earn your money, and where your exposures to risk might be.
Step 2 – Getting a List of Assets
Look at everything on your balance sheet side and describe it. What I mean by that is let’s first talk about your building. Are the and hallways of your building outside or inside (we call this “doors out” or “doors in”)? This one point usually is the distinction between a motel and a hotel, at least for insurance purposes. What is your building made out of and describe the number of stories and the roof? How is the building secured and fire protected? An example description might be, “Building is a 4-story, wood framed building with a clay tiled roof. All floors are sprinklered and monitored for both fire and alarm by ADT.”
Do you own any vehicles, list them and describe them with Year, Make, Model, VIN, and estimate a cost new price if you had to replace the auto? If you do own autos, who drives them? Let’s get a list of all of your employees that are allowed to drive any owned vehicles with full name, DOB, and driver’s license number.
Step 3 – Who Works for You and What Do They Do?
Let’s categorize everyone that works for you by what they do and total up the payroll for each category. These classes could be anyone from front desk clerks, sales, drivers, cooks, cleaning staff, restaurant or bar staff, and any other groups. For this item, we don’t care so much their names, but the total of payroll for each category we have listed.
Step 4 – Tell Us About Any Claims In The Last 5 Years”
This area is a big one. What’s been your “loss experience” in the last five years? What insurance carrier were you with, what happened in that claim, has the problem been corrected, and how much did the insurance company pay for the loss? With claims, the more forthcoming you are with your claims history, the better as it allows us to get a clear understanding of the history of insurance.
An example might be, “We had an employee slip in fall in Dec 2015 while that employee was putting salt down on a slippery ramp. The employee was taken to the hospital, and the total claim was $5,500. We have since installed non-slip concrete surfaces in problem areas along with handrails. We also pre-salt trouble spots before a freeze.”
Now, CoVerica will take this information and shop the insurance market for you. As independent agents, we’re not beholden to just one insurance company so we may start with 20-30 possible insurance companies to secure a business insurance quote. Based on your answers, our markets will further be limited but we can usually find something for every business. What you’ve done for us is compile the data about your business which makes underwriting and carrier selection much easier. Not every insurance market will want a motel as an example; while others may have a special product for businesses with an on-site restaurant or a bar.
Step one above is what we call your General Liability or where you could possibly find yourself in legal trouble by being sued for a particular business activity. If you have zero revenue from renting out AV Equipment, we know you’re typically not renting it out so we know to find minimal coverage for that item. Step two is your property section of “the stuff” of the business. We need to protect this from wind, hail, fire, lighting, business interruption and other perils. By knowing more detail about your property, CoVerica can assess your actual risk. A wood based building with a sprinkler is much more likely to burn to a total loss versus a Concrete Masonry Unit (CMU) constructed building with a monitored fire sprinkler and alarm. Step three is your Worker’s Compensation section which will cover you in the event of injury to your employees. These are covered on a per category basis with a rating per 1000 dollars of payroll. Front desk staff is charged a different rate than say a security guard watchman. Finally, Step Four, tells us about your loss history and your loss mitigation program. Are you actively turning in claims? Are they the same type of claims and are you working on anything to keep these claims from reoccurring? An insurance company is under the assumption that “frequency leads to severity” meaning that a few small claims of the same type will lead to a very large claim in the future. This along with a safety program is designed to show not only the losses you’ve incurred but what you’re doing to keep them from happening again.
If you found this useful, please leave a comment below. Also, if you have a hotel or inn and need insurance, give Rick a call at 972-490-2238 and tell him “That Insurance Guy” sent you from the blog. We look forward to helping your business succeed!