Defaqto analyses the range of insurance products on the menu for hotel, guest house and public house owners.
According to the Office for National Statistics, in November 2004 there were 43,300 pubs and 9,300 hotels in the UK. Of these, more than 50% of hotels and 70% of pubs had turnovers of less than £250,000 per year. By any measure these are large market sectors of small commercial risks, which are ideal for packaged insurance.
In the following tables, Defaqto looks at the cover provided by public house and hotel and guest house policies. Perhaps not surprisingly, given the relative numbers of businesses, there are fewer hotel policies on offer from the major insurers than there are pub policies.
The covers provided by insurers for both products are similar. However, the hotel and guest house market has more trade specific package policies, whereas the public house market is split between policies designed for this market or cover being accommodated under the relevant insurer's shop or retailers policy.
Cover options
Cover offered for trade contents under both products is usually on an "all risk" or "accidental damage" basis. However, there are a number of insurers who provide specified perils cover as standard, with the option to increase cover to all risks/accidental damage. Cover for buildings is generally an optional extension.
Trade contents and buildings policy excesses typically range from £150 to £500 and for subsidence claims for buildings, the excess is generally £1,000.
From our analysis it is clear that insurers provide differing sums insured for covers such as contents seasonal increases, temporary removal for both cleaning and catering purposes, lock replacement and damage caused by emergency vehicles. Surprisingly, there is a major difference for cover provided for customer or guests' personal effects, with a few insurers providing no cover whatsoever.
Fixed glass is provided as standard, with cover either being without a sum insured limit or within the overall property sum insured. Public, products and employers' liability limits are pretty much standardised at £2m and £10m respectively, although there are some insurers providing higher limits. Standard limits for money cover provided under both hotel and pubs policies vary considerably depending on the insurer.
Goods in transit and frozen food cover are either provided as standard or as optional extensions with insurers either providing a standard sum insured or allowing the insured to select his own limit. Legal expenses cover is typically offered as an optional extension with indemnity limits ranging from £50,000 to £100,000.
Business interruption cover for the insured's own premises is, again, either provided with a set sum insured level or the insured can select his own level of cover. Indemnity periods range from 12 to 24 months. Cover for an interruption at the insured's suppliers or brewers has differing sums insured, with a few insurers providing no cover at all.
Extensions included by most insurers, within the business interruption section, included denial of access to the premises, losses due to murder, suicide, poisoning or disease at the premises and also closure by the local health authority.
Defaqto has noted that a few insurers are now specifying which diseases are covered, whereas in the past the only exclusion has usually been for Aids or Aids-related conditions.
As technology has progressed, hotels and pubs need cover for computer equipment. Surprisingly, only a few insurers provide this cover and generally as an optional extension to the policy. Cover is provided on a breakdown basis and the insured can select the sum insured required.
One specific area of cover provided under the hotel packaged policy for resident managers and their immediate family is household contents cover.
Again, there is a mixture of insurers that will provide this cover as standard within the policy cover or as an optional extension. The cover provided is usually on the same basis as the trade contents.
Twenty-four-hour claims lines are generally considered as normal practice within the personal lines market. This is an area though where commercial packages can improve the service provided to the customer. Over half of the insurers analysed for the hotel and guest house table do not provide this service. The public house table is evenly split.
As mentioned at the beginning of this article, although hotel and pub risks have similar risk elements, there are still opportunities for insurers to provide more tailored products for this sector of the market.
