When the economy is not running on all cylinders the hospitality industry is one of the first to suffer. Dropped occupancy rates at hotels are also reflected in empty tables at restaurants. Many are however well capable of managing their businesses through the tough times and a highly competitive business environment.
The need to protect business interests and to keep a close eye on the financials is very important for the conscientious business owner. We decided to focus on a few of the insurance concerns of restaurateurs and hoteliers.
What are the key security issues faced by hoteliers and restaurateurs?
In South Africa we place a special and much required focus on security. We need to guard against the crimes of theft and armed robbery and be vigilant to address the security at business premises. A few important considerations are:
- The area, location and the type of business will be important.
- Access to main routes will make the get-away easy and traffic congestion could lead to delayed response times from the security companies and the SAPS.
- Late night trading will also increase the risk.
- Attractive stock items like liquor and cigarettes may also increase the risk.
- Access control is a very effective way of reducing the theft risk. Installing alarms is not always practical and it can be very costly.
- Security guards and strict instructions to these guards and armed reaction companies will also reduce this exposure.
It is important to recognize that most regard theft cover as a “worst case” scenario. Most clients only select a first-loss type of cover on theft. This will then only cover the amount selected and nothing more. These limits are sometimes too low and the client could be out of pocket after a loss.
What kinds of perils can be covered with restaurant and hotel insurance policies?
Floods; Theft; Fire; Water damage; Electronic equipment; Stock; Stock in transit; All risk (laptops etc); Business interruption; Money; Employee dishonesty; Employer’s liability; Public liability; Vehicles; Personal accident, Buildings; contents; stock.
(Some insurers have packaged these covers in the form of additional cover or a bonus benefit and in some cases they either charge additional premium or a specific excess may even apply)
Herewith a brief description of some of the typical risks to be aware of when insuring your restaurant or hotel:
• Accidental damage – will cover damage caused accidentally for example a staff member was busy cleaning the bar and accidentally fell against a whiskey exhibition and almost destroyed the entire collection.
• Machinery breakdown – will cover the breakdown of certain plant and machinery equipment for example the air conditioning system broke down because the electrical motor came lose while it was in operation. Specific exclusions may apply and normal wear and tear is usually not covered.
• In some cases forced entry will be a condition of cover for a valid theft claim – for the hospitality industry this condition is waived as forced entry will not always be possible for example where guests steal the plasma screen in their room when they check-out.
• Goods in the open – Goods in the open like patio furniture must be insured separately. With Business OUTsurance it is automatically included as part of Contents cover and nothing needs to be specified or covered separately.
• Trauma counselling – This may be required if a traumatic event occurs at the premises and clients and staff need some form of counselling.
• Clients leaving without paying – This can happen at times and specific optional cover is available for this type of event.
• Property of guests and staff – This must be insured separately and the client can select an insured value relevant to the business.
• Locks and keys – Clients and staff losing keys and access control equipment can become expensive and therefore a benefit or optional cover exist to cover this type of exposure.
• Tourist attraction loss due to suicide, murder, rape or attempted rape, shark and wild animal attack, spillage, contagious or infectious diseases can also be covered.
• Suppliers and sub-contractors – Suppliers and sub-contractors used by the business can also suffer losses that may cause an interruption to their business. If this risk exists for example a specific supplier is the only supplier in South Africa, the client can select this cover as optional cover.