The travel and hospitality industries have never experienced a crisis like the pandemic-induced catastrophe they’re currently facing. This year’s health crisis has been felt by hotel operators, investors, and shareholders across the entire world, and more and more lenders are refusing to invest in new hotel developments because of what could be a long-term reality resulting from the pandemic.
In a time that was predicted to have been a hospitality boom, pandemic closures have negatively affected hotels this year. And as the effects of COVID-19 persist in many parts of the world, there doesn’t seem to be an end in sight for these downturns.
Many businesses in the hotel industry have been forced to make some tough decisions this year, including pausing developments or abandoning planned projects for the time being. Although this portion of the hospitality field seems to be at a standstill, there are still steps that can be taken to prepare for their inevitable return to profitability. One of those steps is to make sure your hotel insurance policy includes the coverage to protect you from disasters.
Hotel Insurance: Helping You Prepare for the Worst
Although it’s often impossible to prevent or foresee disasters, business insurance is one factor that can mitigate some of the damage to your business. Some common hotel insurance policies you may want to consider include coverage for business interruption, liabilities, event cancellation, and worker’s compensation.
For example, event cancelation should be a consideration when shopping for insurance policies, especially as many hotels host weddings, business conferences, and other events that have been affected by the pandemic and may suffer in the face of other unfavorable circumstances.
Keep in mind that many insurance providers do not typically provide coverage for pandemic diseases under a standard plan, so you should research until you find a policy that does or come up with a plan outlining how you can weather a similar storm. Below we’ve outlined a range of insurances you can consider:
Business Interruption Insurance
This insurance protects against losses that are sustained due to business closures for an extended period of time. Usually, viruses and contagious diseases aren’t included under typical interruption policies, so it is important to consider this when you take out business interruption insurance.
Most insurance providers outline specific exclusions for viral and bacterial infections in their coverage, a practice that became more widespread in the wake of the SARS pandemic of the late 2000s. Insurers may also include standard pollution exclusions, so it’s essential to look at the policy you’re considering and become familiar with the fine print as well as with your specific needs and risks before you find yourself in a situation in which you need to make a claim.
Event Cancelation Insurance
As previously mentioned, many events in hotels were canceled due to the pandemic. But the right insurance could help if your business finds itself in such a situation. Some event cancelation policies come with a range of exclusions, and it’s important to know what your personal insurance policy says.
Liability Insurance
Liability insurance is a must for hotels, as it is with nearly any business. Without it, you are at risk should you fail to protect your customers and your employees from occurrences like exposure to a disease on your premises if an infected person enters the premises or simple slip-and-fall accidents. A general liability policy will usually cover bodily injury as well as property damage.
Workers’ Compensation
Every business in the hotel industry should have workers’ compensation insurance; in fact, it is mandated for businesses to carry workers’ compensation coverage in many states. This covers any employee who suffers an injury or illness on the premises, and it extends to cover any incident that happens as a result of their employment, too.
It covers all losses that are work-related, and it’s based on the time the loss occurred and when it took place. Workers’ compensation claims have to be made promptly; having this safeguard in place for your staff will help keep your business compliant.
Commercial Property Insurance
Commercial property insurance protects the things that your business needs in order to run. You will find that commercial property insurance will pay to repair or replace any of your business property if it’s damaged or stolen. Commercial property insurance is a must for a hotel, especially if it’s located in a place where natural disasters are common.
Hotel insurance is vital for your property, as the right claims will help you to recoup losses in the event of another catastrophe. Although the future is unpredictable, it is wise to err on the side of caution and purchase business insurance protection for your hotel.
