Business insurance is one area operators should avoid cutting back on
AS operating costs continue to spiral and trading conditions remain challenging, trying to trim outgoings wherever possible is a natural step.
But operators would do well to avoid cutting back on insurance cover, according to Amish Mamtora, managing director of Forum Insurance.
Here he explains the importance of ensuring your business is fully covered – especially during challenging times.
Q: How important is it that business insurance policies are maintained?
A: Cutting back on your insurance cover, especially in a period of uncertainty is like throwing parachutes out of a plane to reduce the weight, or throwing life vests out of a ship taking on water to stop it from sinking.
Insurance is the only truly effective method of mitigating risk.
Q: What does a good insurance policy look like? What should a robust insurance policy for a bar, restaurant or hotel business cover?
A: First and foremost, a good policy must be understood by the policyholder.
A policy that performs as intended will provide core cover central to your bar, restaurant or hotel’s longevity and maintain the business’s ability to continue trading profitability (or to get back to trading as fast as possible) following an unforeseeable incident.
This may include buildings and contents cover, employers and public liability, money, stock, and business interruption cover.
Q: With various levels of cover on offer, what level of insurance should every hospitality business operator have in place?
A: Every hospitality business operator at a minimum should seek employers and public liability.
Predictably, we have found that the operators with long-term success always have a comprehensive insurance package allowing them to bounce back from unfortunate incidents.
Following an incident, if your insurance policy doesn’t provide the immediate cash-flow support required for your business to return to revenue-generating activities, then you’re very likely to close down.
Q: What impact has the COVID-19 pandemic – and the well-publicised situation regarding business interruption insurance – had on commercial insurance policies? And on premiums? How important is it operators have business interruption insurance cover? What can they expect from such coverage?
A: Following the COVID-19 pandemic, commercial insurance premiums have increased, standard cover levels offered decreased, and policy excesses have increased.
This is due to an increase in the volume of claims paid over the pandemic period which has changed the capacity of insurance.
Business interruption covers you for loss of income during periods when you cannot carry out business as usual due to an unexpected event.
Insurers have changed appetites and policy wordings for this cover, it has evolved to either include or exclude ‘future pandemics’ or ‘forced closure by the government’.
Having the correct wording for your business interruption policy is vital in overcoming future challenges that could stop your business from trading.
Q: What are your top tips for operators unsure of what level of cover best suits their type of hospitality business?
A: If you’re unsure what level of cover suits your hospitality business best, don’t leave it to chance.
Find an insurance broker that is proactive in the industry, and is the right fit for you and your business.
Avoid standard or online insurance policies – because they’re just that, standard.
Let the broker lead the conversation and go for the top levels of cover then work back to get cover that meets your budget.
Having the appropriate valuations for property and financial accounts to hand will save you a lot of trouble down the road.
• Amish Mamtora is the managing director of Forum Insurance.