Over the last few years we have seen a hardening in the hotel and motel insurance market. As a result, many businesses have seen large premium increases and policy cancellations. Some have even seen as much of an increase as 50-100% in annual premiums. Umbrella and excess liability coverages are also growing increasingly difficult to procure higher limits due to an increase in large claims.
As a result of this hardening market, hotel and motel type risks must be at their best. In preparing my thoughts I discussed this topic with multiple underwriters, claims adjustors, and other agents. Every answer followed a common trend coming down to a few simple tips to make your hotel or motel more insurable.
- Take pride in ownership
- Create routines to maintain standards
- Pay attention to guest reviews
Take Pride in Ownership
This sounds like a simple topic, but when really considering what pride in ownership means, this can be quite a deep topic. Underwriters are looking to see that hotels or motels are cared for and maintained. Common issues include missing siding, poorly maintained roofing, missing elevators and fire extinguisher service records, lack of general cleanliness, lack of proper safety lighting in areas, and cracked or poorly maintained parking areas.
In short, underwriters always ask, is this a place where you would take your family to stay at? Almost every location will be looked up on Google or some other platform. They will look at the roof and exterior of the building to determine if it is in disrepair. Previous ISO inspection reports will be checked, including crime records in the area. If deemed necessary, especially for higher value locations, a pre-quote inspection will be ordered. 3-5 year loss runs or claim history reports will be requested and reviewed.
For some, these requirements may seem overwhelming, but they don’t have to be. There are simple routines and procedures that can be taken to help motels and hotels to look their best.
Create Routines to Maintain Standards
Even if a hotel or motel is older or in a less desirable state of repair, not all is lost. Many underwriters are more willing to overlook certain concerns if they know the owner has a plan to resolve it and improve going forward. Exterior entrances to hotel or motel rooms have become a red flag for many insurance providers, but if the location is in good repair, some underwriters will still consider offering coverage. Hotels and motels should consider creating a 1-5 year plan for maintenance, repairs, and updates. At least once annually a licensed contractor should inspect the roof, sprinkler systems, fire extinguishers, electrical, plumbing, and HVAC systems.
Daily, weekly, and monthly self-inspections should be performed. Checklists should be created to monitor common areas for slip and fall and other hazards. Caution signs can help to reduce risk to the hotel or motel in more risky areas such as pools and bathrooms. Rules and regulations should be posted. When possible, non-slip adhesive strips or dots should be used in showers and tubs, and overall room repair and cleanliness should be assessed on a regular basis.
Room cleaning staff can assist with their own checklists, but managers should check each room on a regular basis, assessing each room. Documented reviews/inspections can also help protect your business in the event of a claim. Finally, guests can also be helpful in identifying areas of concern and needed repair.
Pay Attention to Guest Reviews
Another common item under scrutiny by underwriters is location reviews. Underwriters understand that there will always be guests that, no matter how good the location and service are, may leave a bad review. These reviews are not an area of concern for underwriters, but if they see a common trend, they may decline coverage based on poor reviews alone. This, unfortunately, is a much more common problem than many would believe. Even a nice location can be declined for coverage when negative trends are found.
Every review should receive a custom response, especially the negative reviews. Owners and managers should do their best to use feedback regarding maintenance concerns and pest control to their advantage. Routines should be reassessed to improve maintenance as needed.
Reviews regarding pest control, undisclosed construction, and poor maintenance are especially concerning to underwriters. Guests’ hotel rooms should be a safe haven to them—a clean place they can return to and feel comfortable in. Mold between tubs and shower surrounds should immediately be removed and recalked. Broken tiles should be removed and replaced. Repairs should be handled by knowledgeable professionals that won’t leave scarred walls or unsightly patches.
In the end, it all goes back to taking pride in ownership. Take pride in your business and make your hotel or motel somewhere guests can’t wait to return to. By taking pride in your business the other items addressed in this article will often take care of themselves. Creating routines to maintain and improve your business location can have a huge impact. Daily efforts to care for the building and prevent loss will add up over time to keep guests returning. Finally, guest reviews should be carefully attended to. Trending areas of concern and specific problems should be addressed and added to routines as necessary.
As owners and managers work to follow these three tips, they will find that more insurance providers will offer coverage, premiums may be cheaper up front and over time, and insurers will be more likely to retain your business for many years to come.