Hotel & Motel Insurance Risk Exposures
Exposures are due to the high combustibility of contents and the multiple sources of ignition. Electrical wiring, plumbing, and heating systems must be adequate and meet current code. Smoke detectors should be installed in all guest rooms and common areas. Cooking equipment must meet all NFPA requirements. Flammables should be stored properly. Business Interruption exposure can be substantial due to lack of backup facilities and the seasonality of some motel operations.
Exposure includes Employee Dishonesty, Money and Securities, and Lock Box. Cashiers’ drawers should be kept stripped with regular deposits made throughout the day. A minimal amount of cash should be kept overnight. Monetary transactions must be monitored and audited on a regular basis to prevent employee theft. Money-handling responsibilities should be separated, with no employee handling both receivables and disbursements. References and background checks should be conducted on all employees. Guest property coverage is important to protect guests’ property from theft by employees, other guests, or trespassers. Coverage is provided for each room and for items in lock deposit box. Controls should be in place to verify guest identity before permitting access to lock boxes.
Exposure comes from Accounts Receivable, Computers and Valuable Papers and Records. Duplicates must be made and stored off site for easy restoration. Additional exposures are present depending on the motel. There may be Contractors’ Equipment for exterior maintenance; Commercial Articles Floater for cameras, audio visual equipment and musical instruments; or a special floater for items used off site.
Exposure is high due to the number of guests on premises. The operation should meet all life safety codes to assure guest safety. Stairways, railings, and floor coverings should be in good condition. Exits should be clearly marked and free of obstacles. Adequate lighting should be available in the event of a power outage. Balconies should be regularly inspected and maintained. Access to rooms should be through an electronic keying system that changes the access codes for each guest. Employees who have access to universal access codes and cards should be monitored for the protection of the guests. Personal injury losses may occur due to alleged wrongful eviction, invasion of privacy, or discrimination. Services and recreational facilities offered to guests, such as exercise rooms, swimming pools, laundry facilities, gift shops, barber, beauty and other personal services will require separate review.
Exposures can be high if the motel has a restaurant or lounge. Employees should be trained in the proper handling of consumables to prevent food poisoning or the spread of other transmissible diseases. Other product liability exposures can arise from vending machines and gift shops.
Exposure is not common with motels. Some motels may contract with a service to transport clients to and from their premises. It is important to determine the contractual relationship between the motel and the transportation service.
Exposures can be high. Cleaning and maintenance operations can cause workers to experience lung, eye or skin irritations and reactions. Slip and falls, as well as lifting, back injury, hernia, sprain and strain, are all common occurrences. Parking lot and sidewalk snow removal may be handled by employees or outside contractors. If employees are responsible, there are potentials for strain and fall injuries. Kitchens expose employees to cuts, scrapes and burns. Interaction with guests can be difficult. Employees should be trained in dealing with rowdy guests.
Minimum recommended coverage:
Building, Business Personal Property, Business Income, Employee Dishonesty, Money and Securities, Guests Property, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonownership Auto, Workers Compensation
Other Coverages to Consider
Commercial Articles Floater, Contractors Equipment, Special Floater, Forgery, Computer Fraud, Employment Related Practices, Business Auto Liability and Physical Damage
Reprinted copyrighted material with permission by the Rough Notes Company, Inc.