The Truth About Hotel Insurance in 2024: A Hotelier's Guide
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Wondering why your insurance costs keep climbing? Learn the real reasons behind the price hikes and discover actionable steps to mitigate risks and control costs.
The Perfect Storm: Why are insurance costs rising for hotels?
The hotel insurance market is in crisis. Costs are skyrocketing, coverage is scarce, and hoteliers are struggling to stay afloat. This perfect storm of challenges demands innovative solutions.
Insurance premiums for hotels are increasing due to several factors:
- Weather Losses: Natural disasters and extreme weather events increasing claim frequency nationwide
- Economic Factors: Inflation pushing up repair and replacement costs
- Cybersecurity: threats creating new, costly risks
- Insurance Competition: Market consolidation reducing competition among insurers
- Rising Lawsuits: Human trafficking lawsuits introducing new legal liabilities
- Increased Claims: Higher number of claims post-pandemic that are hit by social inflation and high-dollar liability claims.
Emerging Risks: What risks do hotels face in 2024?
Not unlike many other businesses, hotels are facing new and evolving risks including:
- Cyber Threats: Increased cyber-attacks, IT outages, and data breaches can lead to significant financial losses along with reputational damages.
- Safety: Another emerging risk for the hotel industry is the increase in human trafficking lawsuits. Many carriers are excluding Assault and Battery, Abuse and Molestation, and Human Trafficking coverage from General Liability.
- Weather Events: Regardless of the causes, more frequent natural disasters and severe weather events are causing significant property losses and requiring extensive coverage.
- Social Inflation: With increased number of lawsuits and the onset of social inflation, claim settlements continue to rise including more nuclear judgements.
The Regulatory Landscape: How are regulatory changes impacting hotel insurance?
Governments worldwide are updating policies that directly affect insurance requirements for hotels. Compliance with new regulations is essential to avoid legal issues and ensure proper coverage. These changes can include health and safety regulations, environmental laws, and data protection rules.
- Stricter building codes
- Enhanced data protection requirements
- New liability standards for trafficking prevention
The Impact: How does this affect my hotel property?
For many hotels, you may have operated without any claims or issues yet are feeling the squeeze by your insurance company. That is because these insurers are heavily impacted on a broader scale which drives up your premiums or limits the number of companies available to provide coverage. Ultimately, this is impacting hotels with:
- Skyrocketing premiums that are eating into thin margins
- Reduced coverage leaving potential gaps in protection
- Many properties becoming "uninsurable" due to frame construction, no sprinklers, access points to rooms, insurable values, etc.
In conclusion, while securing insurance for hotels in 2024 comes with significant challenges, understanding these issues and taking proactive steps can help hotel owners secure the necessary coverage. By addressing rising costs, evolving risks, regulatory changes, the need for customized coverage, and market volatility, hotel owners can protect their businesses and guests effectively.
Strategies for Success: How can I secure the necessary coverage for my hotel without breaking the bank?
For many hotels, you may have operated without any claims or issues yet are feeling the squeeze by your insurance company. That is because these insurers are heavily impacted on a broader scale which drives up your premiums or limits the number of companies available to provide coverage. Ultimately, this is impacting hotels with:
- Invest in risk mitigation:
- Enhance security measures
- Implement anti-trafficking training
- Improve disaster preparedness
- Partner with experienced insurance brokers who understand the market
- Consider higher deductibles to lower premiums
- Document all safety and prevention measures thoroughly
- Manage online reputation proactively:
- Respond promptly to all Google reviews, especially negative ones
- Address cleanliness, maintenance, and security concerns immediately
- Showcase improvements and preventive measures in responses
- Implement a robust maintenance program:
- Regular inspections and repairs
- Document all maintenance activities
- Enhance cleaning protocols:
- Implement and document stringent cleaning procedures
- Consider third-party certifications for cleanliness
- Strengthen security measures:
- Install and maintain security cameras (store footage for at least 12-24 months)
- Implement key card access systems
- Provide regular security training for staff
- Create a crisis management plan:
- Develop protocols for various scenarios
- Train staff on emergency procedures
The Bottom Line
The hotel insurance landscape is undergoing a seismic shift, but adaptation is possible. Hoteliers who act proactively, invest in risk mitigation, and manage their reputation effectively will be best positioned to weather this storm and secure the coverage they need.
What strategies have you found most effective in navigating the current hotel insurance market?
Not sure where to begin? Need immediate assistance? Schedule a callback from our hotel insurance specialists. We'll help you explore your options and find the right coverage. Click here to contact our team and get started with a quote.
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About the Author
Tyler Bartosh (Connect with me on LinkedIn)
A third-generation insurance agency owner and agent since 2007, Tyler Bartosh is the consummate “insurance geek,” using his passion for business, knowledge of insurance, and advocacy for clients to help serve as the expert buyer of insurance. He helps businesses implement risk management strategies that save both time and money, so those resources can be put towards other initiatives in your company.
Away from his career in insurance, he enjoys spending time with his family & friends, volunteering throughout the community, golf, fishing, snowboarding, hiking and virtually anything outdoors and traveling to see live music. Tyler has a wife Emily (who is also an underwriter in the insurance industry), their dog Lucy and a baby girl, Sophie Constance.
About Top O' Michigan Insurance Solutions:
At Top O’ Michigan Insurance Solutions, we pride ourselves on using our skills to provide clients with competitive pricing, stability and understanding, and peace of mind. With seven locations throughout Michigan and 24/7 client access, our team is your 'expert buyer' of insurance for home, auto, farm, boat, motorcycle, business owners, workers compensation, bonds, life and health, employee benefits and more.
We will provide unparalleled and caring service to our clients through our knowledgeable staff and give back to our employees, agency, industry and our communities. Part of our mission is to give back to the Michigan communities we serve. This is something we take action on through We Care and you can learn more about our community outreach at TOMIA247.com/WeCare.
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Disclaimer: This Blog/Web Site does not provide insurance or legal advice. This site is for educational purposes only as well as to provide you with general information and a general understanding of insurance, not to provide specific legal advice or specific contract advice. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute a client relationship.
The information on this Blog/Web Site is not intended to be a substitute for professional insurance or legal advice. Always seek the advice of a licensed agent in your state pertaining to insurance and legal issues.
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