To protect her business, and her income, she will want to purchase a fire insurance policy that will pay to completely replace the restaurant in the event of a fire, provided the cost of the insurance is reasonable. Because this is true, insurers are very careful to pay only those claims that are proven to be legitimate and within the terms of the insurance policy.
SELECTING THE INSURANCE POLICY
To illustrate this point, imagine the following scenario: You have a $500,000 per occurrence policy with $500,000 total, plus you have $1 million in umbrella, or excess coverage. Your umbrella policy is not available because it only pays if you have exhausted your primary per occurrence amount on a given claim.
POLICY ANALYSIS
This has often led multinational hotel chains to place greater emphasis on claims and risk control in the United States. While the hotel industry has been focused on a tight insurance market in the United States, the international insurance market and global legal climate have changed in ways that are critical to the way a hotel operates. Claims and litigation management: Hotel chains should settle claims globally in the same way, whether self-insured or not.
A claim settled in Germany must be settled in the same way as a claim in California. Since lawsuits go global, companies must ensure that the brand is protected in any court in the world.
WHAT WOULD
This needs to be handled very carefully: when carriers fail or leave the hospitality industry, it will be much more difficult to react to a program change than to be proactive. Brand Protection: All locations bearing the company name should have the same level of insurance or have a documented exemption. Since this is not available in most countries, you would need to purchase this as part of a parent company sponsored program.
Your AA-rated company offers insurance coverage for a variety of risks, including workers' compensation, and specializes in the hospitality industry. Betz would like to purchase workers' comp insurance from your company because he will be opening five stores in the Southwest in the coming year.
FACTUAL SUMMARY
QUESTION FOR THE COURT
DECISION
MESSAGE TO MANAGEMENT
THE HOSPITALITY INDUSTRY IN
A thorough understanding of terms used in the insurance industry—such as primary, umbrella, exclusions, and exclusions—is essential for an owner/operator to make informed decisions about coverage and pricing. Identify at least five types of insurance that a nightclub or bar owner would need and discuss the importance of each. Assume that the hotel is to be built in Berlin, Germany, and that your company requires a minimum of an AA Standard & Poor's financial strength rating.
Develop a checklist for buying insurance, starting with recognizing the need for insurance to evaluating the face sheet and current policy. In teams, identify and evaluate websites that would enable a potential insurance buyer to find out information about different types of insurance coverage, the financial status of the companies offering the coverage, and the cost of the coverage.
WHAT DID YOU LEARN IN THIS
Not all insurance companies are the same, so an owner/operator should research the company's reputation, claims payment record, and financial strength before purchasing the necessary business coverage. Assess the legal climate today and then determine the amount of coverage your restaurant business would need to defend against a wrongful death lawsuit brought on by dram shop legislation. Please describe in detail any exclusions and exceptions that may apply to the workers' compensation policy in the hospitality industry where you worked.
Present the top three pages to the class and describe why your team chose them (eg, breadth and depth of information, ease of navigation, etc.).
RAPID REVIEW
TEAM ACTIVITY
Blood Alcohol Concentration (BAC) A measurement, expressed as a percentage, of the level of alcohol concentration in the bloodstream. Bond(ing) An insurance contract in which the insurer guarantees payment to the employer in the event of financial loss caused by the actions of a particular employee. The director of risk management has asked your team to evaluate the number of lawsuits and workers' compensation claims that have occurred in your chain of three hotels over the past year and to develop an action plan to reduce the number by 75 percent.
The reasons for the lawsuits range from slips and falls to alcohol-related injuries to theft of guest property and assaults in the parking lot. The comp claims are primarily due to back injuries sustained by kitchen and housekeeping employees and those working banquets.
MANAGING INSURANCE
INTRODUCTION TO INSURANCE 15.2 TYPES OF COVERAGE
SELECTING AN INSURANCE CARRIER 15.4 SELECTING THE INSURANCE POLICY
Second, some types of insurance coverage are required by law (such as workers' compensation) or by lenders to protect their collateral. Not purchasing the insurance would put this restaurateur and her family at great financial risk. Taking out the insurance would provide the restaurateur with both financial security in the event of an accidental fire and the peace of mind that such security brings.
For a critical evaluation of the insurance company's financial evaluation and other information that will help you in choosing an insurance company. To analyze the insurance policy and determine what types of claims will be covered and what types of claims will not be covered.
IN THIS CHAPTER, YOU WILL LEARN
The premiums (fees) for the insurance must be low enough to attract those seeking to be insured, but high enough to support the number of losses the insurer will incur. Obviously, the lower the number of accident losses, workers injured, lawsuits, and so on, the lower the risk that the insurance company may have to pay out money on a claim. Profit in the insurance industry is the result of increasing premiums, increased returns from investment of premiums and reduction of costs, including payment of insurance claims.
䊏 The likelihood that the insurance company will be financially sound enough to pay, if necessary. As a specific condition of the insurance policy, a background check of controller candidates was required prior to employment.
ANALYZE THE SITUATION 15.1
TYPES OF COVERAGE
A hospitality establishment's insurance policies will reflect the unique characteristics of the type of business operated and the location in which it does business. Insurance companies offer a wide variety of products designed to meet the needs of their customers. However, with no insurance, or too little insurance of the right type, the economic survival of the hospitality business and its members may be at risk.
In addition, when hospitality firms lease space in buildings, the lease agreement may also require them to maintain minimum insurance amounts. Although the specific types and amounts of insurance needed for any given hospitality operation will vary, the following types of insurance coverage are common.
Property-Casualty
Because the hospitality industry consists of a number of operations in different locations, the insurance needs of restaurants and hotels will vary significantly. For example, a restaurant on the US Gulf Coast may feel that hurricane insurance makes sense, while the same type of operation in South Dakota would not. Many states have laws that require businesses to carry certain types of insurance at specified minimum amounts in order to do business in the state.
These include being accidentally hit by another boat, high or low water damage and seasonal storms that could damage his floating restaurant. Property and casualty insurance, in its many forms, is the most common type of business insurance purchased.
Liability
Employee Liability
Dram Shop
Health/Dental/Vision
The bill is comprehensive and extremely detailed, and any potential impact the bill will have on your specific hospitality entity should be discussed with appropriate counsel. The most important thing to note about the law is that the changes it implements will be implemented on a staggered scale, forming five main phases that will occur periodically through 2018.
Workers’ Compensation
From time to time, she would have to take the dishes to the kitchen to be washed and take the waste bin to a designated area, where she would then remove the plastic garbage bag and replace it with an empty one. The filled bags were left in the designated area until they could be taken to a waste container by a laundry room employee. The club was very busy with brunch visitors on Sunday morning on Christina's first day of work.
Halfway through her shift, Christina forgot to replace one of the trash bags until it was almost full. The injury was deemed to be within the scope of his employment, so the restroom attendant was awarded a monetary settlement by the workers' compensation board in his state.
ANALYZE THE SITUATION 15.2
SELECTING AN
INSURANCE CARRIER
- Click on: Insurance Company Ratings under the “Insurance Tools” section
- Select: What the Ratings Mean
- Read the defi nitions of AAA through B insurance ratings
- Select: Access Ratings Lookup Tool
- Type the name of your own automobile or life insurance company into the search box, and click OK to fi nd the rating of
- What is your insurance company’s rating?
- How does it rank among the insurance companies in your state?
LEGAL READING Per occurrence: The maximum amount that can or will be paid by an insurance company in the event of a single claim. Exceptions: Insurance coverage that is normally included in the insurance policy, but will be excluded if the insured does not comply with performance conditions specifically mentioned in the policy. Market capacity: Because hotels have traditionally been loss leaders in the insurance market, there has always been a fairly small number of insurers willing to look at a hospitality risk.
The hotel rooms contained custom-made furniture that was bolted to the walls of the rooms. The provision in the policy for loss or damage to the building included permanently installed equipment, machinery and equipment. The business personal property provision in the policy included furniture and equipment and limited the claim amount to the actual cash value of the items lost or destroyed.
General Star argued that the hotel furniture clearly fell within the business personal property provision since the word "furniture" was used there and not in the premises provision.
