After spending 20 years in the hospitality industry in Vancouver, I transitioned into the insurance industry a few years ago, focusing on the hospitality and outdoor-adventure businesses in B.C.
When I was asked to write an article for Business in Vancouver, I thought it best to focus on the areas of improving coverage, with the goal of providing some topics for your next meeting with your broker and save you some money as a result. I am just going to touch on two areas today: liability insurance and business interruption.
Liability insurance is one of the cornerstones of any insurance policy. It is the key to protecting the assets of the business and owners. How much liability insurance you need to buy can be determined by many factors, including your landlord or your municipality.
The way your liability is rated is based on the type of business you operate, your sales and your claims record. All of these items influence your premium. Higher sales could mean more exposure to more people which could lead to higher costs, which seems fair.
One area that comes up in liability coverage discussion when it comes to the tourism market is waivers. I am sure at one time or another we have all signed a waiver and not given it a second thought. A ski ticket or pass at the amusement park is a form of waiver. Flip it over sometime and read what it has to say.
The best advice for operators is to have your waiver professionally done by a lawyer, submit it to your insurance broker for the insurance company to review and if you ever choose to update it, make sure you let your broker know. Also make sure the waiver you use on your website is consistent with the waiver you use in the office.
Failing to insure a business with the proper interruption insurance could have terrible results on a business, employees and even a community. Interruptions could range from physical damage to your property or building, to breakdowns of public utilities, to physical damage to neighbouring properties.
How would you get back to work if one of these events occurred and prevented your business from operations for a time period? Most businesses that fail to re-open after a loss do so due to their inability to meet ongoing expenses during an interruption.
There are two types of insurance you can purchase in case of an interruption: gross earnings or profits.
The gross earnings form will provide for the business from the time of the loss unitl the business is reopened. This insurance assumes that businesses, once re-opened, will return to the same competitive level that existed prior to the interruption.
The profits form insures a loss to the business from the time of the loss until the income level is restored to a level had the event not taken place. Similar to the gross earnings form, the period of indemnity can be extended to beyond the typical 12 months from the time of loss with an additional premium.
If you are fortunate enough to run a business where all it takes is to open the doors to get back quickly to previous revenue levels, you may want to consider the gross earning form only.
Liability and business-interruption insurance are just two coverages of the many with which those in the hospitality industry should be concerned. When it comes time for renewal, ask your broker for a meeting and have the policy explained to you. Make sure the insurance being recommended is the best for you business. •
