Sourcing the right level of insurance
No matter how efficiently you run your luxury B&B business there are always risks looming beyond your control that can cause havoc for you and your guests, to say nothing of your cashflow.
Most people don’t buy their insurance cover through personal choice, so there is a tendency for them to buy such cover with their attention focused on the price rather than the value of the policy.
If you have been running your B&B for several years, there is every chance you have simply accepted your annual policy renewal without reading in detail the emails you may have received alerting you to the forthcoming renewal.
Policies vary greatly, and often it takes an insurance broker to help even small business owners find the most appropriate form of cover. However, one-stop insurers have improved their flexibility in recent years. Earlier this summer Direct Line launched a flexible format for the purchase of insurance, enabling hospitality business owners to create customised insurance that is unique to their business.
The online tool works by asking some simple questions that are personalised according to the customer’s trade, using the owner’s knowledge of their business to deliver the best set of questions to create the right policy for them.
In the case of B&Bs it provides cover for properties with up to 12 guest rooms. The policy includes public and products liability, business contents and stock insurance as standard. Public and products liability covers injury to guests or other members of the public, and damage to their property in and around your B&B, including goods you supply.
If you want to remove or add any cover, you can do so whenever you need to do so without having to pay additional fees, so you only pay for the insurance for your business needs.
The policy offering clearly has its attractions, but from the point of view of the owner of a B&B business, in effect you are restricted to building your own cover based on what Direct Line has to offer.
An insurance broker would look at several alternative insurers, which might offer wider cover and/or better prices. DIY is fine provided you are certain that you are buying all the protection you need at the best price. But making the time to contact an insurance broker is not probably high on your agenda, any more than taking the time to read through a policy renewal alert.
If you are buying without contacting an insurance broker, you should attempt to source a direct insurer that understands your sector and the hospitality market.
The core issues to look out for in each class include:
Fire or flood may damage your property. Both kinds of event were up this summer just gone and last winter too. Many insurers will cover you for lost turnover following damage by an insured cause within a certain distance of your business, resulting in the loss of guests. Take the time to look at the implications of such a restriction.
Theft of takings
This optional feature covers both your business money and damage to your employees’ clothes and effects, arising from theft or attempted theft of money in your B&B. Again, check the cover limits before you buy.
There are many insurance policies that automatically include legal expenses, but there also some that don’t provide a level of cover to be would be useful to your business in any such an event. For some it is an optional extra. It covers legal costs associated with such things as legal defence, statutory licence appeal, contract disputes, tenancy disputes, debt recovery, property protection, personal injury and tax protection.
Again, there are often restrictions, and claims may be subject to reasonable prospects of success being deemed over a certain level such as a 51% chance.
This will usually include product liability in the event any of your guests be taken ill owing to food poisoning. It may be worth considering if, for example, you B&B has a sizeable and disproportionate income from products which would not normally be considered part of such an establishment’s business – so products other than things like home-made jams.
If you don’t feel you have time to revisit your insurance arrangements right now, next time you receive a renewal notice do take the trouble to read it. You could be quids in.