Running a licensed hospitality business isn’t getting any easier, from rising costs and tightening margins to the many unexpected twists and turns that can affect a business in the course of the year.
Here, Forum Insurance managing director Amish Mamtora speaks to SLTN about the ways a robust insurance policy can help protect a business – and the importance of selecting the right policy for an individual outlet.
Q: What should a robust insurance policy for a bar, restaurant or hotel business cover?
A: In our 33 years of insurance expertise servicing the hospitality sector, a robust insurance policy must cover a range of potential risks at the correct coverage levels.
The first is called material damage cover, this protects your property, contents, stock, and business interruption.
The second is liabilities cover for the public, employees and products. As a business owner you’ll require both of these covers to be able to bounce back from an incident.
A robust policy will also have the correct level of insurance coverage. Far too often we see clients with the correct type of coverage, but with incorrect levels of cover.
Ensuring your policy covers you correctly isn’t an easy task, if in doubt it’s better to over insure your business as under insurance has penalties when claiming from the insurer.
Q: Is climate change having an impact on the kind of insurance licensees should consider for their premises? (for example, are events such as flooding, burst pipes etc becoming more common?)
A: Yes, climate change is indeed having an impact on the kind of insurance coverage that licensees should consider for their business.
With changing climate change patterns, there is an increased frequency and severity of extreme weather events.
Practically speaking for your business, icy weather can result in plumbing pipes freezing and expanding to burst, harming your ability to trade.
The same applies with extremely hot weather, it puts a strain on your fridge/freezers causing them to overheat and shut down, resulting in lost trade.
Looking over your policy wording is important to know how many hours your business is unable to trade for to be able to claim on your policy.
With all policy wordings being different I’d recommend consulting with your insurance broker on this.
Q: Are there any areas licensees should consider insurance for, but rarely do? What kind of incidents can catch a hospitality business out?
A: If your business has a website, stores bookings or customer data digitally or has a digital till then your business is liable to a cyber attack and cyber liability insurance is vital.
Everyone thinks ‘a cyber attack won’t happen to my small business’ but it’s much easier for a hacker to extract small sums from multiple businesses than a large sum from a single large business.
You may have an outdoor terrace or space in your business which you will be responsible for. That will also extend to the environment surrounding your business, which if contaminated or polluted due to you or your guests will require environmental liability cover to put right. It’s rare, but if it happens it’ll cost you in the hundreds of thousands to correct.
Q: Several hospitality venues in Glasgow have been targeted by industrial action and protests in recent months, leading to significant interruption in trading. Are events like these covered by business interruption insurance?
If not, is there a type of policy that would protect a business if it is targeted by unions or other activist groups?
A: Business interruption insurance provides businesses cover for lost income and expenses during a period when they’re unable to operate due to a covered event.
When it comes to industrial action and protests blocking access to your business, not all policies are equal so you’ll need to read the fine print in the policy wording.
But if your property is damaged which results in lost income then you claim on your business interruption policy and it will be as if nothing has changed.
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 insurance to have, or even of the cover level my advice is to consult an expert.
Your business can be similar to others but no two businesses are the same.
Whether you come to us for advice or go to another insurance broker, sitting down for a 15 minute consultation on the phone or in person will save your business from threats and incidents in the future.
