As a hotel owner or operator, expecting the unexpected comes with the territory. A hurricane can cause property damage, or a guest can slip on ice in the parking lot. For events such as these, there are common types of insurance policies, such as property insurance and liability insurance. But there are other, less common insurance policies that hoteliers should discuss with their insurance brokers to be certain their property is protected from every angle.
Notably, a continued rise in data breaches at point-of-sale systems in hotels has created an immediate need for cyber insurance. At least eight major hotel companies were hacked in 2016, including Omni Hotels & Resorts and the Trump Hotel Collection. According to Rich Clark, managing director of insurance and risk management, North America, at AJ Gallagher, hoteliers cannot be too careful when it comes to protecting themselves from the fallout of a data breach.
Clark explains some of the reasons that type of coverage needs to be addressed. “Obviously, cyber insurance includes coverage if there’s a class action suit. But it also covers other, less apparent costs—expenses that can run into the millions of dollars,” he says. “There are notification costs—the cost to notify each one of the individuals who had their card information stolen—and you’ve also got the compliance fines credit card companies levy when credit card information is stolen.”
With new overtime rules and changing minimum wages in certain parts of the U.S., wage and hour insurance coverage is also becoming increasingly important for hoteliers. Clark says he has noticed an
uptick in employees alleging that they did not receive fair compensation for breaks or overtime work. If an employee sues over one of these issues, this coverage will aid in the costs associated with defending those claims.
No matter what existing insurance coverage a hotelier has in place, Clark emphasizes the importance of regularly reviewing policies with an insurance broker who specializes in hospitality.
“We see a number of instances where the hotelier has dealt with the same insurance broker for 20 years, but they’re the only hotel client the broker has,” he says. “They need to be talking to brokers who are knowledgeable about the hotel space and who can show them a client list that includes other hotels.”
If a hotelier is unsure about his or her insurance broker’s hotel expertise, Clark urges them to get a second opinion. The key, he stresses, is having the right broker as part of your team. “Hoteliers really need to pick their provider based on knowledge and expertise, more than just having people come in and review every so often,” he explains. “Brokers who specialize in hospitality already have a relationship with that market, so they will know what the client needs.” Once a hotelier settles on a trusted broker, Clark says it is a good idea to review policies with him or her on an ongoing basis and make changes as necessary.