Comprehensive Guide to Hospitality Insurance: Protecting Your Business from Unexpected Risks

From major property damage to lawsuits, unexpected claims cut into profits for businesses in the hospitality sector. Hospitality insurance and risk management are essential safeguards.

What Is Hospitality Insurance?

Hospitality insurance isn’t a single insurance policy. Rather, this term refers to a comprehensive insurance program designed specifically for the needs of businesses in the hospitality industry. Businesses that may benefit from hospitality insurance include restaurants, bars, hotels, resorts, catering companies, and golf courses. Event planners also need hospitality insurance that covers event liability.

Why Do Hospitality Businesses Need Special Insurance?

Many of the coverage types that hospitality businesses require are similar to those that businesses in other sectors need. For example, slip and fall injuries can happen in any setting – from restaurants to offices – so most business owners need coverage for this type of risk.

However, hospitality businesses also have many unique exposures. Liquor liability is a prime example. Bars, restaurants, hotels, resorts, and events frequently serve alcohol, which opens up the possibility of excessive or underage drinking. Many states have dram shop laws, which mean businesses that serve alcohol may be liable for injuries or property damage that results from overserving.

Other unique risks involve causing personal injury while serving food or beverages or providing lodging or other amenities. For example:

• A California man was recently awarded $50 million after a hot tea spilled in his lap in a Starbucks drive through.
• Guests at a hotel in Ventura, California were awarded damages of $2M after being bitten by bed bugs.
• A hotel in Texas is being sued for gross negligence in the drowning of an 8-year-old guest in their lazy river pool.
• In another notable case, MGM resorts, was sued for premises liability following the 2017 mass shooting by a gunman located on their Mandalay Bay property. Victims and their families claimed that MGM failed to implement security that could have prevented the attack in this landmark case that ultimately settled for $800M.

These cases make it clear that strategic and hospitality-tailored risk management programs are essential.

Putting Together Your Comprehensive Hospitality Insurance Program

Although businesses within the hospitality sector share many of the same exposures, each business is unique. This means each insurance package needs to be unique, too. An insurance broker who understands the hospitality sector can help you craft a comprehensive insurance package that fits your specific needs. This may include:

• Commercial Property Insurance – Provides coverage for property damage from many common perils, including fire, wind, hail, and vandalism. Whether you need to fix the roof or completely rebuild, commercial property insurance will help you get back to normal as quickly as possible.
• Business Interruption Insurance – Protects your business from lost income due to covered perils (typically the same perils as those that commercial property insurance covers). Property damage isn’t the only loss that businesses experience after a disaster. If you have to close your business for a prolonged period, the lost income could make it hard to reopen. Business interruption insurance provides coverage for this risk.
• Commercial General Liability Insurance – Provides coverage for lawsuits alleging bodily injury, property damage, or personal and advertising injuries. From slip and fall lawsuits to allegations that your advertisements infringe on someone else’s copyright, general liability insurance provides coverage for many common lawsuits.
• Liquor Liability Insurance – Covers your business in case of claims involving property damage or injuries caused by intoxicated customers. If you sell or serve alcohol, this is important coverage.
• Commercial Auto Insurance – Provides coverage for company vehicles and meets state requirements. Whether your company owns one vehicle or a fleet, commercial auto insurance is a must. In addition, hired and non-owned auto liability insurance provides important coverage for the personal vehicles you use for business purposes.
• Cyber Insurance – Protects your company against the impact of data breaches and other cyberattacks. Many businesses rely on computer systems to take payments, check in guests, and handle other critical operations. They often have sensitive payment information that may make them attractive to hackers.
• Employment Practices Liability Insurance – Offers coverage for many employment-related lawsuits. If your company is sued for harassment or discriminatory hiring and firing practices, EPLI will cover your legal defense.
• Workers’ Compensation Insurance – Provides coverage for work-related injuries and illnesses and meets state requirements. Hospitality workers face threats of violence from the public as well as everyday risks associated with back injuries, falls, and transportation accidents.
• Event Liability Insurance – Designed to cover the liability needs of events. If a guest is injured or property belonging to a third-party is damaged, event liability insurance provides coverage.

Are you looking for comprehensive hospitality insurance? Heffernan Insurance Brokers offers coverage designed to meet the needs of businesses like yours. Learn more.