Slipshod maintenance can sink your insurance claim
Someone said that ‘one of the most effective ways to hold down insurance costs has nothing to do with the coverage you choose, it’s about the way you treat your employees. A happy workforce often leads to lower premiums, since loyal workers are likely to report risks before accidents happen”. How true. Nevertheless, you need to be aware that the insurance ‘cover’ you take protects you from the ‘expected to the unexpected’.
Anyone who runs a hotel or restaurant must know that the business has three fundamentals. The first been the property / site, the second your guests and staff, and the third your revenue. Ensuring safe passage of the abovenamed three things should be at the heart of every hotel insurance policy.
Should a guest slip on a wet floor in your restaurant area, you could be held liable for compensation. In this instance; Public liability insurance will reimburse you for damage, loss or injury to third parties in the property. If you employ staff, Employee liability insurance will protect you should any member of your staff get injured during work. Usually, your building is your most expensive asset – without it you have no business; so you need cover in the event of fire, theft, flood or accidental damage. Understandably, ‘Building & Contents’ would be the most expensive items on your insurance cover. (Where buildings cover ends, contents cover often begins. Contents cover protects furnishings within the hotel, such as beds, chairs, lamps, etc.).
If Public liability and Employee liability insurance is the OPD (outdoor Patients Department) in health, then Building & Contents cover is the ICU (Intensive Care Unit) of insurance and getting the right equation when insuring your property is therefore important. Getting it wrong – especially by cutting on corners / costs will swing your hotel on the wrong side of the equation and closer to ‘Fawlty Towers’.
Even after paying premium insurance fees, there are hotels that simply don’t understand the policies they have. Little do they realize that there are seemingly innocuous clauses built into the seemingly ‘all encompassing’ policy that requires them to ‘mitigate further damage’ in the event of a natural disaster. For instance, if your hotel lobby is flooded, it behoves the management to take steps, such as clearing the wet carpet of water and temporarily fixing broken windows, to prevent mold and mildew forming on the lobby carpet from post-event humidity. Failing to do this and simply waiting for the insurance assessor to finally arrive to survey the damage can pose problems.
Maintaining the property and equipment in good condition is a common stipulation in insurance policies. Insurance policies don’t cover for general wear and tear of hotel contents. As the operator, you are expected to maintain it at all times or replace it when necessary. Insurance coverage can be tricky. What happened to the Ramada Plaza Hotel in Albany N.Y. when hurricane Irene hit Albany in 2011 is a lesson to be learnt. Heavy rain and gusty gale force winds drove water into the hotel’s lobby leaving in its wake a mess and extensive damage.
In the aftermath of the hurricane, the hotel filed a claim. The insurance company declined to pay. The hotel went to courts for breach of contract whilst the insurer sought dismissal of the lawsuit. The court ruled in favour of the insurance company and dismissed the case. It turned out that hurricane Irene did not cause the damage. It was the caulk (sealant), originally installed on the hotel’s exterior walls to seal the areas where the walls met the hotels concrete floors and abutting windows, that was the culprit! Due to age and lack of maintenance, the caulk had separated, creating spaces through which the rain water stormed in creating havoc. Further compounding the hotel’s case was the hotel owner’s and general manager’s admission that, to their recollection. the regular maintenance programme did not include the checking of the exterior caulk.
I rest my case.
Shafeek Wahab – Editor, Hospitality Sri Lanka, Consultant, Trainer, Ex-hotelier
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