Owners of restaurants, bed and breakfasts, hotels, and retailers know better than anyone how things can go wrong with little or no warning. Here’s how to protect your business and ensure you continue to thrive.
Being a small business owner in the hospitality industry is about creating memorable experiences, delivering world-class customer service, and providing comfort and relaxation for your guests.
With summer officially underway, and after two years of enduring a pandemic that hurt travel and tourism in Ontario, now’s the time for business owners in the industry to make up for lost time (and revenue).
Here is good news: a recent Ipsos survey finds that 61% of Canadians intend to travel between July and September and spend more than $2,400 while doing so. Better yet, most plan on sticking close to home, and one of the key factors in their destination decision-making is ensuring their money supports local businesses (67%).
But as the owner-operator of a restaurant, bed-and-breakfast, hotel, or retail shop, you know better than anyone how things can go wrong with little or no warning. So how can you relax and get the peace of mind you need to focus on your business?
The answer is ensuring you have a comprehensive business insurance policy as the foundation for your risk management strategy to protect yourself from a broad range of risks, including loss or damage to your property or third-party lawsuits.
Getting Coverage for Hospitality Businesses
Generally, hospitality businesses welcome customers to dine, stay the night, engage in leisure activities, entertain them, or sell them goods and services. You cultivate the relationship between you and your guests by providing exceptional service and unique experiences.
Of course, not all hospitality businesses require the same insurance policies, but there are many similarities. Here are some of the most common types of coverages that comprise a comprehensive policy:
- Commercial general liability (CGL) insurance. CGL is the foundation for almost all business insurance policies. It covers third-party claims or lawsuits alleging bodily injury or property damage. For example, if one of your guests trips, falls, and is injured while on your premises, CGL pays for their medical expenses.
CGL typically includes product liability insurance to cover any product you manufacture, distribute, or sell. If you own a bar, restaurant, café, or hotel and serve alcohol, you will also need liquor liability insurance. Any establishment serving alcohol can be held liable for damages and injuries caused by one of your customers if it’s determined their alcohol consumption was a contributing factor.
- Commercial property insurance. Sometimes called business contents insurance, commercial property provides financial support to pay for losses or damages to your property because of extreme weather, fire, flood, theft, or vandalism. It also pays to repair or replace your inventory or merchandise (including food), furnishings, and electronics after an insured loss. Commercial property insurance includes business interruption coverage to replace net income you lose following a property-related loss to help keep your business running.
- Equipment breakdown insurance. If you own expensive electrical or mechanical equipment, this type of coverage pays to repair or replace it if damaged by power surges, electrical shorts, or mechanical malfunctions. It’s applicable if you have office equipment like computers and photocopiers or are a restaurant with fridges and kitchen appliances. You must have commercial property insurance to add this protection to your policy.
- Cyber liability insurance. Regrettably, small businesses are big targets for cybercriminals. Undoubtedly your business has a website, a point-of-sale terminal, or accepts debit and credit card payments from your guests. Cyber liability covers you for costs associated with cybercrime, such as a data breach that exposes your customers’ private and financial data or a cyber-attack.
- Commercial crime insurance. Although you strive to hire honest, hardworking people, you should still protect yourself against internal theft, fraud, and acts of employee dishonesty with commercial crime coverage. It also covers theft of money in transit outside of your business if stolen while making a bank deposit or from a delivery person. You must have commercial property insurance to include this coverage in your policy.
- Commercial auto insurance. If your company has one or more vehicles, or if you use your car, truck, or SUV for business purposes, you should think about including commercial auto in your policy. Most private-passenger car insurance policies do not cover damages or collisions that occur to you if you use your vehicle for work, including part-time side jobs like delivering food.
- Legal expense insurance. It won’t be cheap if you need to hire a lawyer or need legal advice. Legal expense insurance is, comparatively, and includes coverage for various issues such as employment or contract disputes, debt recovery, and taxation audits.
Determining what coverages you need depends on several factors, including what your business does and your products or services.
How to Buy a Business Insurance Policy
When it comes to purchasing insurance, you always have plenty of options. However, not all insurance companies are the same concerning the coverages they provide and the annual premiums (the price of a policy) they charge.
That’s why it pays to research your options and shop around. You can do that yourself, but it can be time-consuming and confusing unless you know what you need and can decipher the jargon in your policy. (Have you read an insurance policy from start to finish and understood it?)
Or you can partner with a licensed business insurance broker, who will do the shopping for you and advise you on what coverages to have, explain the limits, deductibles, and exclusions of your policy, and answer your questions. Unlike an insurance agent who works for one insurance company, a broker is not beholden to one insurer. For example, at Zensurance, we have more than 50 insurance companies in our partner network that we can turn to find our clients the policies they need at the lowest price available on the market.
Your broker also serves as your representative with an insurance company if you file a claim for damage or loss. Although a broker does not determine the cost of your policy or the outcome of a claim (insurers do that), they can go to bat for you to ensure any claim you file is settled as quickly as possible.
About the Author
Shaan Alikhan is a licensed insurance broker and Team Lead, Property and Hospitality, at Zensurance, Canada’s leading digital business insurance brokerage.
This article is courtesy of Zensurance. CCT does not endorse third party companies. This article is intended for informational and educational purposes.