Hotels are large buildings and damage to critical systems can be costly to address. Many hotel insurance policies cover a wide range of these possible losses or damages, including:
• Fire & Smoke Damage
• Ice & Snow Damage
• Tornado Damage
• Hail & Wind Damage
• Hurricane Damage
• Plumbing Leaks
• Water Damage
• Foundation Damage
Not receiving the insurance payment you need after a disaster on your property can lead to a complete loss of the business, which is what having hotel insurance is supposed to help you prevent. If your insurer is not behaving in good faith, insurance lawyers may be able of assistance.
About Hotel Damage Insurance Claims
As the owner of a hotel or motel, there are many different risks and several types of insurance coverage options that should be considered. The effects of hotel damage go beyond just the building structure. To begin, if your hotel or motel employs 50+ individuals full-time, you are required by the Affordable Healthcare Act to offer your employees employer-subsidized health insurance. Another consideration is business insurance, a necessary coverage that protects your hotel or motel business in the case of extreme financial loss from natural disasters, accidents and more. Hotel-motel insurance is a specific type of business insurance policy that is tailored to the unique industry. Further coverages should include general liability and workers’ compensation insurance. General liability protects your business from claims for injuries sustained by a guest while on the property of your business. Workers’ compensation is designed to compensate a worker who suffers from any work-related illnesses or injuries. If the hotel or motel offers shuttle or limo service, consider a commercial auto liability insurance policy as essential. If the hotel or motel offers alcoholic beverages, it needs a liquor liability insurance policy. Many hotels/motels include a restaurant and/or food delivery service. A food-borne illness liability insurance policy protects you when food is contaminated and a guest falls ill.
If a hotel or motel becomes contaminated with any airborne pollutants, such as mold spores, premises pollution liability insurance is needed. Another essential coverage is cyber insurance. This policy is important if computer and data management systems have been breached. When this happens, cybercriminals have access to your guests’ personal information. As for property concerns, property insurance is necessary. If any of the property is lost, damaged, or stolen as a result of accident, disaster, vandalism, and more, you will need coverage under this insurance policy. With equipment breakdown coverage, the hotel or motel will be covered for equipment failure. Equipment can include items such as an elevator, a washing machine and dryer, or even a coffee machine. A hotel or motel business owner can further protect the business with business interruption insurance, utilities interruption coverage, crime coverage, and food spoilage coverage. Many hotel and motel business owners might consider purchasing umbrella coverage. The needs of your individual hotel or motel must undergo careful assessment.
Dealing With Your Hotel’s Insurance After A Disaster
Handling insurance claims while undertaking cleanup and repair efforts after a disaster strikes your hotel property is the last thing an owner or manager wants to deal with. However, how you handle that claim will directly affect how much coverage you can get from your various insurance policies. Your insurance policy exists to give you (and your business) piece of mind in the face of a disaster or worst-case scenarios. Once you purchase your insurance policy (property damage, business loss, liability, etc.), you can focus your time and capital on business operations and growth. Because the claims process is not always smooth sailing, we recommend having a plan in place for several reasons. Having a plan in place can help mitigate the pain of navigating the claims process when you find yourself in the midst of a disaster that could cripple your business operations and affect your ability to produce income and stay afloat. Having a plan will help your business get back on its feet quicker and minimize the time it takes to complete the claims process and ultimately, get paid. Having a plan in place will make it harder for the insurance company to tell you “No” assuming your property sustained damage from a covered event. The first step is to put your business in “Disaster Readiness” mode. You need to put some procedures and processes in place so that when disaster does strike, you are locked and loaded, and the insurance company will have no choice but to take your claim seriously.
How to Get in Disaster Mode
• Emergency Drills: You should plan for events that are the most likely to occur based on your specific situation; your location, your business type, your customers, weather patterns, industry trends. (Side note: That’s why it’s important to attend industry events and town halls to keep track of what is trending in your industry.) Your team should have an emergency plan to be prepared for such situations. Emergency drills for scenarios such as storms, earthquakes, floods, robberies, fires, and other common or anticipated events will help your staff be prepared for those events. Designate someone to be the “point person” for creating and executing these types of drills and planning.
• Install Surveillance Cameras: An insurance claim can be made easier if pictures and video of the event are available. By installing digital cameras, and appointing someone to maintain the equipment and footage, a business owner can help manage the risk of an insurance claim. In addition to providing valuable information about the damage to your property for insurance claims, cameras also help manage risk to the business by providing information should someone file a lawsuit against the business where video documentation can be used to dispute or support certain facts.
• Incident Reports: A business owner can also mitigate risk by implementing an incident reporting system. A report of incidents that occur on the premises will help a business provide the proper documentation in the event of an insurance claim or lawsuit. By requiring staff to write a written report of incidents that take place, and file that report in an organized storage system, the business has an easily accessible record of events. Combine that record with information kept from video and photos, and you will have an invaluable trove of information for managing insurance claims or lawsuits.
What should a hotel owner do once the disaster has occurred?
You should have a plan for that part of the process as well. In the event of a catastrophic event or any property damage event, where the business-owner must make an insurance claim, stay calm and follow this checklist:
• Contact the Police: The first phone call you make after (or during, if necessary) a catastrophic event is the police. There may be times where this seems unnecessary; however, there are many times people underestimate the value of a police report when filing an insurance claim. In addition to a police report, emergency medical and/or firefighting services may be needed. A business-owner should post important emergency service numbers in prominent areas, so that they may be easily referenced by the employee staff. And someone on the staff should be designated as the “point person” to take control of activating your disaster plan when an event triggers it.
• Mitigate Damages: You must take reasonable steps to protect the insured property from further damage or theft. Basically, you need to make sure that you do what you can to keep things from getting worse. First, cover any holes in the roof or windows with boards or plastic. These steps may not be a permanent repair, but will help your property from getting damaged further. If you see water coming into the building, put buckets down and call a roofer to patch the roof temporarily or have someone tarp the roof. Just keep all receipts. Document everything you see that needs temporary repairs or mitigation efforts (photos/video, etc.) The insurance company will need to see damages to approve replacement of certain items (especially a roof). You should also try to salvage whatever furniture or equipment you can. If you cannot remove it from the premises, then make sure they are covered and protected.
• Contact the Insurance Agent and File the Claim: Your insurance policy should have directions on who to contact to file a claim. You can post a copy of that page in the office of your “point person”. Because most insurance policies have a requirement that you file your claim in a “reasonably prompt” manner, the second phone call made should be to your insurance agent or designated insurance carrier representative to file the claim. If you are unsure how to file a claim, contact your agent. The agent will either take down all the necessary information, or will direct you to the proper representative to make the claim with. Once the claim is made, it will be assigned to an adjuster. Feel free to follow up until an adjuster is assigned to your claim and contacts you. Once you speak to a representative about your claim, ask for definite deadlines and timetables for the completion of the next step in your claim process. An adjuster should schedule an appointment to come inspect your property, relatively soon. The adjuster will likely request evidence of your loss, and will request to inspect the damaged areas of your property. The adjuster will likely ask you several questions about the event that triggered the loss so it will be helpful if you try to keep a diary, log, photos, video of anything that shows what happened and what damages were caused by the event (storm, fire, etc.). The “point person” should know that this needs to be done as soon as the event starts causing damage to the property assuming the situation is safe.
• Contact Professionals (Contractor, Lawyer, and Accountant): While the claims process is ongoing, it would be wise for the business owner to contact his/her own contractor in order to begin to determine the potential cost to repair/replace property. You should try to get at least three separate repair estimates for the repair of your property. These estimates will be valuable and give cover to the insurance adjuster in determining the value of the claim and ultimately may lead to approval of your numbers. If you do not agree with what the adjuster’s recommendation or decision to repair or replace your property or if you claim is denied you may want to consult with a Lawyer to determine if the adjuster or insurance company handled your claim properly. Sometimes there is ambiguity in trying to translate insurance policy language into English and this can lead to decisions by the insurance company where claims can be denied because of an insurance representative’s interpretation of the policy language. A Lawyer can utilize his team of experts to help with interpreting insurance policy language to see if coverage should have been granted to help cover a property owner’s claim. Sometimes there are disputes on whether the claim should be covered and sometimes there are disputes on what the actual cost is to put the property back into pre-storm condition.
• Track Down or Create this Information: The following documents/information will help you present a robust insurance claim (one that is more likely to get paid and minimize delays). Before and after you have called the insurance company to file a claim, gather the following information:
Video footage and photos of incident or damage
Incident reports taken by staff
A list of all damaged property
A list of lost documents, along with their corresponding value (eg., bills of sale, cash, checks, charge account records)
Operational expense bills to document the business’ regular expenses
Manuals and Warranties of purchased equipment
Invoices for Prices Paid for Damaged Property/Items
Receipts for any temporary repairs
Estimates from Contractors to Repair or Replace Damaged Property
Before entering the premises to retrieve or document these items, make sure to take proper safety precautions, especially if the structure is unsafe. Additionally, do not throw anything away until it is shown to the police or insurance adjuster. We suggest making copies of everything.
• Settlement with your Insurance Company: It is your responsibility to follow up with the insurance company on your claim. In a large loss type of event they may be stretched thin and the squeaky wheel gets the grease. Document all contacts with the insurance company in your log or diary. If you attempt to contact the insurance representative that is handling your claim and are unsuccessful, document the attempt and the outcome. It is the adjuster’s job to recommend how much value/money the insurance company will pay for the claim. As the person who purchased the insurance policy, the business owner can also hire his/her own professional(s) to compare with the insurance adjuster’s assessments/values. Once the adjuster has provided their report, and calculated the value of property lost or damaged, it is time for the insured and adjuster to determine if an agreement can be made regarding the payment for those losses. While we don’t want the claims process to be delayed, understand the claims process can be time consuming. And it is very important not to rush through the process because some damages are only revealed after weeks or months after the date of loss. Rushing the adjuster through the claims process may cause him/her to overlook damage that is not immediately apparent. If you are presented with a Proof of Loss document in order to receive payment, it may be a good time to request assistance from an attorney or damage expert to ensure that the losses documented in the Proof of Loss are appropriate and inclusive of everything that needs to be doneIf you don’t agree with the damages on the Proof of Loss and the insurance company won’t let you add language stating these are only for the “undisputed amount” of the claim then it’s time to seek the assistance of a Lawyer. Once you do receive a check for damages to your property it is absolutely imperative that you use those funds to make the repairs included in your insurance company’s estimate. If you don’t and the property is damaged again from a covered event, your insurance company will not be obligated to pay you again for the same damages if no repairs were made. If you submit a claim for damages to a roof and you have been previously paid for that roof from prior storm damage, and you never made the repairs, then you are presenting a fraudulent claim. If depreciation has been withheld, you will be able to recover the depreciation once you incur the full cost of repairs assuming you have a Replacement Cost Value (RCV) policy. If you have an Actual Cost Value (ACV) policy then you will not be entitled to recover your depreciation.
There are steps we recommend in disputing a denied or underpaid commercial property insurance claim:
Reach out to the Adjuster (and maybe Agent) – sit down or ask for a meeting or call with the agent and adjuster to have them explain the claims process. Ask specific questions and get specific answers as to why they denied your claim. Be sure to ask the insurance adjuster exactly where the policy says it does not have to pay for the damage to your property, or why the amount they did pay is justified. Ask them if there is anything else they need from you to reconsider their decision. You can also request a re-inspection of your property by a different adjuster to get a second opinion.
Review the Insurance Policy With Ascent Law
The next step is to carefully read the insurance policy. One of the most important parts of understanding how your adjuster computed the amount to pay for damage to your property is reading and understanding your policy. It is difficult to dispute a decision made by the insurance company until you understand your insurance policy. Additionally, having a good understanding of your insurance policy during the claims process will help you have a better understanding of what kind of policy you’d like to get when it is time to renew. Once it is time to renew, be sure to have a discussion with your agent about the claims process and how changes in the policy can avoid some of the problems you had.
Create a File & Document Everything
Make sure you keep a timeline of everything that has occurred since the date of the loss/event. When you reported the claim; when they inspected; when they made a decision; and all correspondence/communications in between. All contact you have with the insurance company should be documented. Keep a claims journal to document all of the times you attempted to contact the insurance company, all of the times you were able to reach the insurance company, and all of the times the insurance company contacted you. Many insurance companies use an online claims reporting system. This makes it easier for you track down all correspondence. The more documentation you are able to keep, the more it will benefit the business. It will show that you were actively engaged in the settlement of your claim, and that you met your responsibility under the policy contract.
Litigation and Appraisal
If at the end of the claims process, you were not able to get what you believe is necessary to repair your property, then it is time to seek the assistance of a lawyer. Some of the options available to you are litigation, where a lawsuit is filed, and appraisal.
Hotel Lawyer Free Consultation
When you need legal help from a Hotel Attorney in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506