Restaurateurs and hospitality businesses in general should expect to feel affects that large losses are having on the profitability of insurance carriers. As a result of the recent years’ natural disasters, fire, water damage and other catastrophic claims paid by insurers; high deductibles, premium increases and lower liability limits are a current reality in the property & casualty insurance arena.
Yet, even as the insurance market continues to harden, business owners can minimize costs and transfer risk in 2020 by putting an emphasis on effective risk management practices.
• Practicing proper preventative maintenance is vital to minimizing insurance rate increases.
The best thing you can do to help mitigate the risk and potential losses is to rigorously plan to prevent them. For example, investing in leak detection and automatic shut-off to mitigate water leaks can substantially lower property insurance rates. Institute policies and procedures to ensure safety, including monthly fire pump tests, installing hand rails and floor mats in potential slip and fall areas, as well as replacing old electrical panels.
• Develop & Maintain a Flood Emergency Response Plan.
If there is one thing the hospitality industry has emphasized as a result of past hurricane and storms, it is the importance of creating a robust flood emergency response plan. Start by determining if your establishment or facilities are located in flood zones. That may be obvious if they are situated on a coastline or waterway. If you are in the U.S. you can also double-check the address against FEMA’s flood hazard map. The key components of a Flood Emergency Response Plan establishes who has responsibilities for particular functions and the procedures and practices that need to be followed to ensure that everyone including patrons and staff who may be displaced is kept safe during the emergency situation.
• Minimize Third Party Liability.
It’s also important to vet and evaluate all third party contractors to make sure they’ve got the right policies and procedures in place and they operate with best practices. Always request that anyone working on your property must provide a current certificate of insurance (COI) to ensure they’re covered for any damage they could potentially cause to your property so that you are not held liable for their actions and inadequate limits.
• Highlight Your Strengths For Underwriters.
A tighter market means underwriters can be more selective so make sure you’re a risk they want to take. For businesses that are already actively engaged in risk management, or have a regular preventative maintenance schedule, it’s time to toot your own horn. Don’t get caught with old underwriting information, let your insurance advisor know what you’ve been doing well so they can go to bat with the underwriter, advocating on your behalf to earn the best premium for your risk.
Your insurance broker will be your best guide in navigating through the current insurance environment, and can advise you on risk management strategies that will put your organization in the best position for it.