5 Ways to Manage Insurance Claims for Hotels in the Wake of Disaster

After unprecedented financial challenges from COVID-19 shutdowns, hotels are facing above average hurricane¹ and wildfire seasons in 2022, which will increase flooding risks, fire damage and air quality-related cancellations.

Weather-related closures can have a devastating impact: Hotels within 50 miles of a Category 3 hurricane or greater experience average revenue losses of $1.9 million per day.² In addition, abusive guest behavior³and cyberattacks have left hospitality properties exposed to liability.

Create a plan to mitigate insurance claims for hotels

Hotels that experience an event need to act fast and return to business as usual. That requires a plan to manage insurance claims efficiently and effectively. Here’s how:

1. Prevent claims before they happen. Identify potential exposures: Examine structural weaknesses, slip and fall hazards, data protections and gaps in security. Conduct security sweeps before events, such as weddings, concerts or conventions. Ensure proper construction for temporary structures and evaluate the scene with an eye toward preventing liability.

2. Identify loss partners. Before an incident happens, hotel owners and operators should know who to call. They need to identify the right contact at carriers and brokers, restoration companies and building contractors, and list physicians and IT experts to contact for accidents and cyber events. Hotels should also have a communications plan to handle media requests if a high-profile event occurs or to notify guests if the property is uninhabitable.

3. Document everything. After a disaster strikes, hotel owners and managers should photograph damage and take witness statements as soon as it is safe to do so. Locate receipts for property that must be replaced — such as computer equipment and artwork — and assess the value of items without bills of sale to aid adjusters. For cyber incidents, it’s important owners and operators bring in outside experts to assess the damage and determine what data has been compromised.

4. Triage claims. Focus on the most urgent needs after an incident. For instance, restoration teams need to be on site within 24 hours of a weather event to prevent further damage. A forensic accountant can calculate the hotel’s overall losses from an incident for more negotiating power with the insurer. For a guest injury, contact attorneys immediately and err on the side of overcommunicating — it can reduce the likelihood of litigation. Management needs to close out claims as quickly as possible.

5. Find the right coverage. With rising inflation and increasing premiums for cyber, general liability and property insurance, hotels up for renewal may face an uphill climb to get the right coverage affordably. Despite rising rates, hotels need to ensure all aspects of the property are covered and that the organization has enough insurance to survive a major event. Consider increasing reserves to account for rising materials costs and supply chain delays.

Contact HUB International’s hospitality experts to learn more about preventing and managing insurance claims.

¹National Oceanic Atmospheric Administration, “NOAA Predicts Above-Normal 2022 Atlantic Hurricane Season,” May 24, 2022.
²Lodging Magazine, “Hurricanes and Hospitality: How Major Storms Impact Performance,” September 22, 2021.
³Wall Street Journal, “Adults are Throwing Tantrums – in Restaurants, Planes and At Home. Blame the Pandemic,” September 16, 2021.