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In this article we will talk about the liability and property coverages that would not only satisfy your peace of mind checklist but also secure your assets for the hospitality industry. Hospitality industry’s biggest markets are Hotels and Motels (at least regarding private ownership). Both are immensely different than other commercial industries. Last time we discussed the commercial c-store liability and property coverages. We will do the same for this hotel and motel industry.

Let us peak into the differences between Hotel and Motel. Hotels provides lodging to the general public. Rooms are rented out to the customers either on a short- or long-term basis. Hotels may or may not have the following services offered to the customers:

Motels solely provide room rental services and tend to be no more than four stories high with door openings to the outside rather than the internal structure of the buildings.

Like any other industry, hospitality industry isn’t safe from litigation or risks that comes with the owning or maintain high value assets. There are several examples of the real-life claims that one could find online. We will look at couple of such claims in this article. Negligence is the bases of most filed claims. If a customer can prove your premises negligence, he/she may sue you for any number of instances. Slip and fall being very common form of a claim. Real life example, a hotel manager went into labor while on duty in New York City in 2011, giving birth to her child in one of the hotel’s guest rooms, she filed a $10 million lawsuit against the hotel. Imagine this being your location and you don’t have insurance – it would get very nasty very fast. So, basically her claim as a manager was that her supervisor rushed her out of the premises following her labor, and did not grant her maternity leave, and terminating her employment a short time afterwards (6 months give or take). Scenarios such as these are not uncommon.You might ask, “Okay, so I would like to secure myself from such lawsuits but how much would it cost?” Please check the FAQ at the end of this article.

Here are some things that might count towards negligence: improper pest control causing bed bugs, unable to maintain and update security to prevent thefts in rooms or common areas, untrained pool staff or no pool staff without any proper signage of “no diving” and “no running” (lifeguards may be required at some locations), improper hire (no background check or proper vetting of employees hired), no upgrades or non-maintenance of locks around the property, non-complaint safety measures for stairs or elevators, and many more. You might be shocked to learn this but all the above mentioned are considered reasonable care or measures that law requires hotels and motels to upheld.

The following is a list of Liabilities coverage offered under hotel and motel insurance policy:
This protects your business from claims such as loss due to bodily injury or property damage from guest who stay on your property.
Liability (If alcohol is served either at restaurant inside the hotel or room service): If your premise serves alcoholic beverages or operate bars than this coverage protects you from losses due to the actions of intoxicated guests who either causes bodily injury to themselves or others or any property damages.
This protects you against any claims made by your former or current employees. Claims that would sue you or your business for an allegedly employment infraction (racism, malpractices, etc.)
Under this coverage there are two options: Commercial Auto or HNO. Commercial Auto is the option if your business owns the shuttles or transportation vehicles for either customers or your employees. HNO is the option if your business hires/rents non-owned (not owned by your business or affiliation) transportation for transportation of customer or employees. This covers you from any potential liabilities caused during the use of the vehicle.
Only selective insurances offer this coverage. The following are the options that can be added: Docks, Pilings, Gangways, Electrical and Utility hookups, Bulkheads if scheduled, Dock Boxes, Power Pedestals, and variety of other structural and functional aspects of the docks and piers. This liability coverage will cover any damages that are caused as follows: collapse due to the weight of ice, snow, or sleet, wind wave wash – damage due to wind driven waves typically associated with storms, hurricanes, or other similar calamities. Flooding however is not covered with most insurances due to the exposure of such structures.
The Liability part of this coverage protects your business against the lawsuits from the customers or affected party and helps you pay for legal defense, and any reimbursements to the affected party on your behalf. Maintenance and Service part of this coverage helps you pay for any repairs, medical care, legal defense fees, penalties by the state for compliance, property damage, and vandalism. Service aspects for pools might include but are not limited to cleaning pool filters, vacuuming, cleaning floats, heater repair, chlorine ratio enhancements (pool dependent), salinity (pool dependent), underwater lights, underwater speakers and utilities, underwater hydro-flow machines, and several others.
Most common type of hazards for restaurants includes but are not limited to fire, smoke, spoilage, cooking mishaps, and food poisoning. The liability part of this coverage will protect you against the lawsuits and cover any medical or property damage claims due to the poor maintenance, objects placed in manner that causes a tripping hazard, leading to fall injury. The equipment breakdown will cover breakdown of any freezers, dishwashers, air conditioners, and other cooking electricals. Food contamination will cover against replacement costs and food poisoning claims due to the spoilage – power outages which could lead to defrosting, or other destabilizing food factors (policy dependent – please discuss with a Jubilee Expert).
Umbrella gives you excess liability coverage. It provides your business with additional coverage on top of your general liability policy to give you extra cushion to pay for the costs that might exceed the policy limits. Umbrella coverage limits range from $1 million to $15 million for small to mid-range industries and higher range for other policies dependent on the selection of your choice.
The scope of this coverage is limited but does cover you against the claims and damages due to the bed bug infestation at your business. Due to constant flow of customers who are traveling might unknowingly leave these pesky bugs behind. Bed bugs spread at an exponential rate and in a day or two you might see several complaints from your customers about the bed bug infestation in their rooms. According to the most city guidelines if this scenario occurs at your premise, you must immediately take actions such as isolating all the infected rooms and immediately contact local pest control. This will not only shut down your income for the duration but also cost you heavily for the service rendered by the pest control company. Plus, you must take care of the customer claims if they file a lawsuit against your business for this mishap. Some examples of such incidents during 2020 are as follows: a customer won $200,000 settlement due to the bed bug bites the customer had to sustain over three nights of stay. Another customer won a settlement of $850,000 due to 100 bites after staying in a hotel in the Indianapolis area. She complained to the hotel management, but the actions taken didn’t help resolve the situation. She was able to provide major hospital expenses she incurred for the recovery. Another customer won a settlement of $1.5 million dollars due to permanent scaring from the beg bug bites and mental trauma where he had to dispose of all his personal belongings due to infestation of the bed bugs. This is a must have coverage for your business. No matter how upscaled your maintenance might be no one is safe from this bed bug bastards.
Any incident involving fights, expulsion from a bar or restaurants, self-defense (either from a threat or mistreatment by the bouncers) causing bodily injury or mental trauma are covered under A&B coverage. This coverage has a sublimit ranging from $15,000 to $50,000 in most cases.
It is very common for businesses to use some form of electronic data on customers and employees for record keeping and billing information. This means that all this data is digital and accessible through internet and servers. Any data that is accessible through internet is prone to cyberattacks. Cybercrime is becoming incredibly common as it is the highest pay low risk for cyber criminals. Some of the risks cost includes the following: data recovery fees, legal fees, media mitigation, crisis management, regulatory fines if data of your employee or client is exposed, defamation in some cases leading to mental trauma, and several other unique scenarios depending on the claims. All the above can cause bankruptcy or loss of business which is covered by cyber liability coverage.
This covers your statutory liability as an employer under state workers compensation laws. Medical treatment due to injuries and indemnity payments for your employees disabled by work-related incidents, liability coverage for legal suits is covered. It also covers disease and accidents. For example, bodily injury due to disease contracted during employment, including resulting death, caused or aggravated by employment conditions.
Also known as professional liability, protects your business from lawsuits that arise from your negligence in rendering proper service or maintenance.
The following is a list of Property coverages offered under hotel and motel insurance policy:

The structural components and the functional bases of each building for your business will have its appropriate coverage. Your property coverage is determined by various factors including but not limited to the materials used in building and roofing. Whether your building is fire resistive, inclusion or exclusion of fire safeguards – sprinklers, self-extinguishers, central or local fire, burglar alarms. Any property damage due to not at fault incidents are covered excluding natural disasters. Natural disasters must be separately added for extra coverage which could include Flood, Earthquakes, or Volcanoes.The following are also covered under this policy: any damage sustained by your business including loss of property or income and extra expense for either 12, 18 or 24 months, guest’s property on premises, accounts receivable, credit card slips, accidental discharge of fire suppression systems or water systems, outdoor signs, canopies, fences, elevators, escalators, landscaping, increased cost of construction due to ordinance of law, or similar aspects.

  • Manager’s Cottage: will carry similar coverage but will most likely won’t heavy coverage due to the square footage of the space provided. This will also include the liability incase the manager sues the business for any negligence.
This protects your assets within your business property including but not limited to your décor, carpeting, furnishings, electronics, food supplies, grooming supplies, garments, chemicals, and alcoholic beverages (some might need addendum due to unusual high cost – per piece value of $10,000 or more). This will also cover your business from lost, stolen, vandalized, or destroyed property.
: This will cover the damages to your advertisement signs or billboards on site. This also include the malfunctioning due to electrical short-circuit or damages sustained due to breakdown or wind knockdown.
Any equipment within your business structure breaks down and it interrupts your business or makes your business standstill than all the cost for the equipment repair, or replacement including the cost of damage to your business would be covered under this policy. Computer equipment, electronics, guest reservations to equipment in the kitchen, lending of any other necessities to your guests – irons, grooming supplies, extra beds, special equipment requests, and such.
This could include any historic artwork, fragile items like statues, China utensils used at restaurants inside your property, indoor or outdoor fountain artworks, collectibles, or on display jewelry on statues or glass cabins. Any damages, vandalism, or robbery of such items are covered under this policy.
Frequently Asked Questions (FAQ):
This is a no brainer question. Any hotel or motel is not immune from litigation – mostly high-profile claims. Usually, you have two options: risk facing claims for liability yourself – which could lead to bankruptcy or loss of financial asset. Or maintain a proper Insurance that will fight for you and cover all liability claims based on the type of coverage you get. Jubilee Insurance helps you understand what you might need based on your portfolio; what might be good coverage for you;why and how you should avoid extra costs on your policy. Most importantly Jubilee Insurance will provide lifelong free customer service.
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