Victoria Romero-Trigo, finance director at NDML, offers some advice for ensuring hotels are protected, with a look at different types of additional cover.
Risks are everywhere. More often than not, we’re able to control these risks and prevent accidents and incidents arising. However, sometimes we simply can’t expect the unexpected. That’s why having a comprehensive insurance policy in place is so important.
Insurance not only provides financial support if something goes wrong. It also offers peace of mind and reassurance for business owners. Your insurance policy will protect your hotel in a make or break situation, keeping you afloat financially as your business recovers and rebuilds from an incident.
Check your cover
Most businesses recognise the importance of Buildings and Contents cover. It protects hotels in the case of fire, flood, theft or other damage. It’s likely you’ll have this type of cover in place, but it may come as a surprise that around 50 per cent of UK businesses are thought to be underinsured. That means that, if the unexpected happens and you have to make a claim, you might not be covered for the amount you need to rebuild your business.
To avoid underinsurance, make sure you have set accurate reinstatement values. Contrary to common belief, this doesn’t just mean the worth of your venue. Any reinstatement value should be the theoretical cost of re-building your hotel to the same size and specification as your existing building. This includes demolition costs, professional fees, inflation costs, replacement of assets and equipment, reinstating permanent fixtures and much more. Arrange a comprehensive building valuation at least every three years to make sure you’re adequately insured.
Protect your people
If you employ one or more members of staff, you are legally required to have Employers’ Liability insurance. This will protect your hotel if an employee makes a claim against you. To prevent accidents from occurring, develop an effective safety programme which includes employee safety training, regular health and safety meetings and hazard awareness training.
Having Public Liability insurance is the best way to protect your business against accidents or incidents involving members of the public. Remember – guests and other on-site visitors are just as likely to have an accident as an employee. However, improving security at your hotel can not only prevent incidents but can also help you to defend a claim if you need to. Install CCTV as a deterrent against violence, theft or fraud, and train your staff to keep your guests safe (such as challenging ID and dealing with disruptive or abusive guests).
Business owners and senior management should also consider Management Liability cover. If a personal claim is made against them, they may not be covered under your hotel’s Liability insurance. Management Liability protects your hotel’s finances, and the personal wealth of its directors.
Additional risks to be aware of
You might think terror and cyber attacks won’t happen to your hotel, but both risks are on the rise.
Over 40 per cent of cyber attacks target small businesses. Hotels are particularly vulnerable as they store sensitive data, including customer records and financial information – exactly the type of information a cyber attacker is looking for.
Your staff should have adequate cyber security training, knowing never to “just click” on a link or share personal or financial information. They should also be trained to look out for suspicious behaviour and have knowledge of what to do in the event of a terror attack.
Ultimately, though, these types of attack are unpredictable. The best way to protect your hotel is to have adequate Cyber and Terrorism insurance in place. This will cover you financially in the event of an attack, ensuring your business can recover as quickly as possible.
Dealing with spurious claims
It would be great if people were honest all the time. There are cases, though, where an individual may make a claim against your hotel when you weren’t at fault at all. It’s your responsibility to prove you did everything you could to protect your employees and third parties. Having strong claims defensibility will help to protect your hotel against spurious claims.
You should have good policies and procedures in place, but you must also capture this information in the form of records and procedural checklists. This evidence and documentation will help you to defend your hotel if someone does make a claim against you.
The benefits of working with a broker
No two hotels are the same, even if they’re part of a group. Individual hotel characteristics produce different risks. Factors such whether a hotel is licensed to serve alcohol, or the age of the hotel’s building, can significantly alter your risk. Insurance brokers act as the middleman between your hotel and your insurers. They get to know your business, assess your risks and present them in the best possible way to the insurer. This ensures you have the right level of cover you need, at an affordable price.
Risk management also plays a big part in this process. Work with risk management experts to identify potential risks and put measures in place to control them. More “standard” risks such as slips and trips can also be vastly reduced by implementing effective risk management procedures and protocols. Monitor areas of high footfall and train your team to be vigilant. For example, regularly check for spillages or other hazards and rectify them immediately – and record this. You should also undertake and document risk assessments for all areas of your hotel, updating and adapting these risk assessments as changes happen. This will demonstrate you’re doing everything you can to protect your hotel, your staff and members of the public.
It’s human nature to assume the worst-case scenario won’t happen to us. Take action now to improve your risk management procedure and protect your hotel with a comprehensive insurance policy suited to your specific needs.
