ARE YOU COVERED?
Are You Covered?
Policy Exclusions In Hospitality
he hospitality industry faces
many unique risks and
exposures to loss. Whether
a hotel, resort, or a bed
& breakfast, all of them
have one thing in common: they need
extensive Commercial General Liability
and Commercial Umbrella policies
that cover and mitigate each of their
potential sources of risk. Ultimately, it will
depend on what type of business is being
conducted, but it is safe to assume that
anything outside of “ordinary business
operations” is going to require additional
coverage. Children’s programs, pools,
fertilizers/herbicides, snow removal, and
banquet/meeting facilities are just some of
the areas of loss to bear in mind.
The first step for businesses in the
hospitality industry should be to ensure
their Commercial General Liability and
Commercial Umbrella insurance protects
them from the myriad of claims they may
face. They can do this by reviewing their
policy exclusions. Those exclusions could
prove financially ruinous after any loss,
and worse, many business owners don’t
realize they exist until it’s too late to do
anything about them. A quick review of
the policy exclusions shown on the policy’s
applicable forms page is a great first step.
offering childcare, play areas, or child-
centered activities absolutely must have
coverage for specific claim issues such as
Abuse and Molestation. Yet, all too often,
this is excluded from their policies.
• Another often-excluded issue in
Commercial General Liability and
Commercial Umbrella policies is Bodily
Injury from fungi or bacteria. This
could become a problem should people
fall ill after being in a pool or hot tub.
Most of the time, this is excluded from
policies, so be sure to double-check all
exclusions in a policy.
• Legionnaires Disease contracted from
heating, cooling, and dehumidifying
equipment will not be covered without
adding the proper endorsement
modifying the policy’s pollution
exclusion. The endorsement is readily
available, but your insurance broker
must request the modification.
Here are a few quick examples, but they
are by no means exhaustive: As you can see, these exclusions are not
always immediately obvious, and they can
sometimes feel as though they are coming
out of left field. If there is one thing that
business owners know, however, it’s that
being prepared is always going to be better
than the alternative. Could your company
risk being caught unaware by one of these
exclusions or by others that you simply
haven’t thought of?
• Hotels, resorts, amusement parks,
restaurants, and other businesses Work with your insurance broker or
insurance company to make sure these
BY: KEVIN SWEET
exclusions are eliminated or modified
in order to mitigate risk. An insurance
company should be willing to work with
you to either make policy amendments or
remove the exclusions of concern.
Too often, I see cases where policy
exclusions exist unbeknownst to the
policyholders. About 85 percent of the
time, an insured will have at least one
of the three aforementioned exclusions.
Whether it’s Abuse and Molestation, or a
complete exclusion for fungi or bacteria, or
a total pollution exclusion—it’s not helpful
regardless of the premium savings.
When I point out these exclusions, people
are surprised and sometimes even angered.
Hopefully, before any loss occurs, they
find these exclusions with the help of
an insurance expert who knows the
hospitality industry. If you read nothing
else in your policy, please read the
applicable forms page where the exclusions
will be shown. With insurance, as with
many preventative services, it can feel like
a money grab at times. But it isn’t. Just like
you would go to get regular checkups at a
doctor before something bad happens with
your health, you want to be prepared for
potential liabilities before they become a
serious issue for your business.
An insurance company not willing to work