Travel and hospitality businesses around the world have taken an enormous hit because of the unexpected COVID-19 pandemic. This industry has suffered more than most, as travel was (and, in many cases, still is) either explicitly banned or extremely discouraged in many places.
The travel industry’s struggle to stay afloat has brought business for hotels to a screeching halt. And given the rate of repeated spikes of infection in many areas, it’s hard to tell whether the public will feel comfortable traveling and using hotels any time soon.
A Common Concern for Hotels
One common concern among hotel owners has been whether their hotel and motel insurance claims will be affected by the pandemic. Some hotels can rely on their business interruption insurance. This is the insurance that will kick in when a business can’t operate due to a disaster. The pandemic has caused a massive loss of income, and some hotels and motels have even had to shut their doors completely.
After months of few to no customers booking rooms, hotel employees are losing their jobs and hotels are unable to meet their regular costs. Those who have the ability to rely on insurance might have the edge needed to survive the bleak conditions of the pandemic.
Business interruption insurance can be used to compensate for a hotel business forced to close in the wake of a crisis, although there are some limitations.
What Does Business Interruption Insurance Cover?
Business interruption insurance generally covers losses that come from damage or loss at the premises of the hotel. There are extra coverage options, like property damage insurance which covers guest property, too. Of course, there are many factors to be taken into consideration when it comes to insurance coverage and losses caused by COVID-19.
Will Hotel Insurance Cover Losses from COVID-19?
Because there isn’t any physical damage to a building or physical loss to a company, an insurer may turn down claims that a virus caused damage to a business that would be covered under a business interruption claim. Policies designed to cover contaminant or pollutant exclusions don’t always include viruses, either.
Some insurers can also argue that, in cases where the government did not explicitly close hotels, you can’t claim prohibition or prevention of premises access. If governments had exclusively banned access, then these claims would likely have more traction.
Some insurers offer virus exclusions, but that doesn’t necessarily mean that COVID-19 is covered. Ultimately, it comes down to your specific hotel insurance policy, contract, and coverage. If you want to make a claim for your hotel or hospitality business, you should first consider whether your insurance policy covers the claim you would like to make.
An experienced agent from your insurance agency will be able to help you evaluate your policy coverage and get a better idea of what it covers. They can also help you upgrade your coverage if possible to provide an even wider range of protection in the future.
The overall question of which damages to businesses will be covered by insurance during this pandemic does not have one definite answer, but instead, it will be solved on a case-by-case basis according to specific policies, agencies, and individual businesses.
