What are the most common insurance claims for hospitality businesses?
When you consider what tend to be the most common claims in hospitality, it’s easy to understand why caterers and owners of food establishments favour certain types of insurance.
There are a number of types of insurance to consider when it comes to building and maintaining a strong enterprise. The following scenarios really happened and are good examples of the kinds of major claims hospitality businesses tend to make:
Many unforeseen events can be insured. A restaurant in Kalgoorlie suffers more than $18,000 in water damage when a pipe bursts in the premises above. This causes multiple types of damage; apart from property damage and equipment damage, causing food to spoil, the restaurant has to close its doors for a time. This is where business interruption insurance – what AAMI calls ‘back to business’ – would be very helpful, as it can provide cover for revenue lost due to an insured event. Depending on the extent of the damage, claims can run into tens of thousands of dollars, particularly if it takes several months to rebuild the restaurant and replace damaged equipment.
You can’t always get out of the way of natural disasters or weather events. Storm damage is more common than flood damage, but both can be incredibly costly to a business. After a severe storm in St Kilda, a bar faces almost $86,000 in business costs to repair extensive damage to its premises and equipment. Once again, because the business cannot trade during this time, having business interruption insurance would be important.
Fires can start anywhere – in the kitchen, at neighbouring premises or within a shopping complex – and spread into the business premises in which you operate. It’s important to note that even if your premises aren’t damaged, you may be in a complex that has been affected, and therefore can’t continue business operations while repairs are being done. For example, a fire breaks out in the west wing of a shopping centre, damaging visitor walkways that are the only passageway to a pharmacy business. During the repair period, the whole wing needs to be closed off. In this situation, the revenue lost from having to close the pharmacy may be covered by business interruption insurance.
Not all claims are major, however. Some tend to be smaller:
Malicious or accidental damage: These tend to impact one part of the business, such as the front of a restaurant, for example. Glass doors and fittings are often subject to damage.
Burglary and theft: Depending on what is stolen, and the value of the items, it does not necessarily take you out of business, but it is an annoyance to replace the items and it impacts your profit in the meantime.