What is business insurance for accommodation services?
Having some level of protective insurance cover is important for any business. However, if you run a motel, B&B, guesthouse or some other type of accommodation, many of the business insurance policies available in Australian will not adequately cover your specific needs.
Rather than taking out a generic policy, it's often a great idea for accommodation service providers to take out insurance that is designed specifically to suit the needs of their industry.
Accommodation providers need to have a policy that offers protection for things like public liability, product liability, business interruption, fire and storm damage, theft and even personal injury cover. Read on to find out more about tailoring cover to suit your business.
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Holiday accommodation insurance
If you are an accommodation service provider, you may need a range of different insurance covers.
On a basic level, property insurance is a must for all accommodation providers. This type of cover will protect the building and its contents.
Public liability is another essential form of cover. Guests can injure themselves in any number of ways and if your business features a pool or recreation facilities, then your risk will be greatly increased. Public liability cover offers protection against expensive lawsuits. Businesses that sell food or other products to guests may want to consider public liability cover.
Other business insurance for accommodation services you may want to consider include:
- Business interruption: Business interruption insurance to covers lost profits in situations where, due to unforeseen circumstances, your business forced to temporarily shut down
- Workers’ compensation: You will need to check if you require workers' compensation insurance. Don’t assume that because you are a family-run operation that workers’ compensation is not applicable to you.
Consider the risks your business is exposed to before deciding what cover you need.
In order to determine the type and level of insurance cover your business requires, you'll need to determine the hazards your business is exposed to, the likelihood of them occurring and what the consequences would be if something occurred. Business owners should ask themselves the following questions:
- How much is the property worth? Include the value of all furnishings and amenities in your calculations.
- Does the business serve food and alcohol? Is there a commercial kitchen on-site?
- Do you have employees? You need to consider how many employees you have and any risks they may be exposed to.
- Who is responsible? Are you responsible for your guests' belongings while they are staying with you?
- Is the business located in an area that is prone to natural disasters? For example, some areas of Australia are prone to an increased risk of flood or bush fire.
- Are there one or more vehicles used in the business? If there are, consider whether you'll need insurance coverage for those vehicles.
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Things to look for when choosing business insurance for accommodation services
When looking for insurance coverage for your accommodation business, make sure to keep in mind that there are a range of incidents and events for which you may want to be covered. Right at the top of the list is damage caused by fire and storms. Violent storms and fires can have a devastating effect on businesses, so protection is a must.
Your business will also need to be covered for theft, along with protection against costs resulting from vandalism.
Remember, most property insurance policies will exclude coverage for glass breakage, damage to signage and landscaping. If you want protection for these areas of your business, you may like to consider taking out additional cover.
Business interruption insurance covers the loss of income a business suffers when it is unable to trade due to an unforeseen event, for example a flood or earthquake. This type of cover is specially designed to ensure your business is able to stay afloat and return to the financial state it was in before the event occurred.
Liability cover is an essential form of insurance for accommodation service providers as it offers protection against compensation for personal injury or property damage. If your business sells food, alcohol or other products to guests and customers, a product liability policy should also be considered.
If your business relies heavily on one person in order to operate successfully, you may require key person insurance. Insurance to protect your workers against personal injury, along with cover for your business vehicles in the case of accident or theft, could also provide peace of mind.
General exclusions affecting business insurance for accommodation services
As with any form of insurance, business insurance for accommodation services policies contain a range of exclusions where insurance providers will not pay a claim. Some of these exclusions will commonly affect accommodation providers and, while they differ from one policy to the next, these exclusions typically include:
- Claims resulting from acts of war, invasion, revolution or civil unrest
- Claims resulting from the failure of you or your business to comply with any relevant statutory obligations, by laws and safety requirements
- Any intentional or willful acts or omissions by you, your family members or employees, along with any fraudulent or dishonest acts committed by the same
- Many claims relating to acts of terrorism
- The destruction, corruption or misappropriation if any electronic data
- Loss of money resulting from clerical or accounting errors
- Many policies do not provide cover for flood, tsunamis or storm surges. If water enters a building as a result of structural defects, faulty design or lack of maintenance, you also won't be covered.
Risk prevention and FAQs about holiday accommodation insurance
Q. Which companies offer business insurance for accommodation services?
- A. A number of respected and well-known insurers offer business insurance for accommodation services in Australia. These include CGU, NRMA, AAMI, GIO, Allianz and QBE.
Q. What type of business insurance do I need?
- A. It's impossible to provide a stock answer to this question as the type and amount of cover needed varies greatly from one accommodation business to the next. Consider the range of risks your business is exposed to, the likelihood of them occurring and what the consequences would be if they do. This will help you determine the coverage you need.
Q. What do I do if I need help finding a policy?
- A. Shopping for insurance can be a confusing and sometimes daunting task. If you need help along the way, speak to an insurance broker for expert advice tailored to your situation. Brokers will be able to help you find the coverage you need for your business.
Q. How do I make a claim?
- A. Your insurance provider will provide instructions on how you can make a claim on your business insurance policy. In most cases you'll be required to submit as much evidence as possible to support your claim.
Q. How long will it take to process a claim?
- A. The time period involved can vary greatly depending on the type and severity of the claim you make. Complex claims can also take longer to investigate, but your insurer will be able to give you an approximate time frame and keep you up to date on the progress of your claim.
Accommodation service providers face a range of unique risks to the stability and financial position of their businesses, so taking out business insurance for accommodation services coverage can help these operators protect themselves against any risks. For help finding the right coverage for your business, speak to an insurance consultant.
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