If you run a hotel, you have a legal requirement to get certain forms of hotel insurance. But other types of cover are optional. So, what happens if you do not have hotel insurance?
In this post we will outline why comprehensive, specialist cover is something that no hotel of any size should be without.
What Insurance Do Hotels Legally Need To Have?
If you employ any staff, then you have a legal requirement to get employer’s liability insurance. This will cover your staff for any accidents and injuries they may sustain while on the job.
You may be required to get buildings cover as part of your mortgage or your property leasing agreement. And if you are a member of any professional bodies, you may need to get certain forms of liability cover as a condition of your membership.
Beyond this, there are no other laws or regulations to say that your hotel has to get adequate insurance for other risks.
What Risks Do Hotels Face?
Running a hotel is an inherently risky business. On an almost daily basis you will likely have to deal with a number of small problems, any one of which could quickly escalate into a major issue:
- A guest could accidentally or intentionally damage furniture, fittings, or fixtures. You will have to pay for repairs or replacements before any other guests can use their room.
- A member of staff could accidentally spill food or drink on a guest, or their property. The guest may make a claim against you, for injuries or for damages.
- A fire or a flood could force you to close for weeks, or even months. For as long as you are closed you will not make any money. But you will still have to pay for repairs, and you will still have to cover all of your bills and your staff’s wages.
- A mistake in the kitchen could lead to an outbreak of illness among your guests. Every affected guest could make a claim against you. You may also have to deal with reputational damages, and even a visit from the health inspector.
- A power cut, or issues with other utilities, could leave your guests without water, heating, or electricity. Every single one of them may request a refund.
- A lengthy power cut could also mean food in fridges and freezers has to be thrown away, which could be very costly.
- Thieves could break into your hotel at night, lifting cash from your tills or safe. Or a dishonest employee could rob you of thousands over a long-term period.
What Happens If I Do Not Have Hotel Insurance?
If you do not have insurance to cover you for losses like those listed above, then your business will have to pay for any costs to put things right, or for legal representation to gain funds from the responsible party, if there is one.
What Does Hotel Insurance Do?
Hotel insurance can cover most, if not all, of the costs that may arise from any of these situations. For example, public liability insurance can cover the legal fees, along with any compensation, that may arise from accidents, illnesses, or injuries guests sustain while staying at your hotel. Business interruption insurance can cover any loss of income you may experience if you are forced to shut for an extended period.
Without hotel insurance, you would be liable to meet these costs yourselves. For this reason, even a small problem could potentially sink your hotel business.
Be sure to read our full guide to what hotel insurance covers, and why you need it.
You will find some additional guides for hoteliers on our site:
- A hotelier’s guide to managing risk.
- How to reduce hotel business insurance costs.
- Why your hotel needs cyber insurance.
Get the Tailored Hotel Insurance You Need
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance specialists. We are committed to protecting your hotel, your staff, and your guests from every risk you might possibly face.
No matter if you are running a large or a small hotel, we can tailor a niche insurance package to ensure you are covered for all risks at the best possible price.
Find out how we can help you get a bespoke and cost-effective hotel insurance policy today.