Question

4-2 You have opened a new motel with an attached restaurant and cocktail lounge. What are the risks that your business faces? What insurance coverages should you consider essential in your insurance program?

Answer 1

Ans - Hotel and motel business faces various risks-

1 Shared profits - If you have opened a newly motel near a restaurant or cocktail services and if they have better services and the services which you are not providing then profit margin will be low or shared among other similar service providers near the area.

2 Changing Demands - Due to continuously changing in technology, there is also a change in the demands of the customers in the hospitality industries. It is challenging especially for the motels to cope up with the hotels and restaurants near them that are providing better technology services than the motels.

3 Legal risks- It is one of the complicated processes every business have to go through. The policies of the government, taxation norms, etc have to be kept in mind while running the business especially if the business is new if it has a shortage of finance then it can be quite challenging.

4 Human resources - It can be quite challenging for any business to recruit quality employees at the beginning because the company may not be able to pay much because of finances and also the company does have a brand in the market, and that's why the job seekers usually do not get attracted towards new business

5 Inventory management - It is also one of the concerns for a new business to manage inventory, especially in hotel business because the customers are not loyal and it is hard to predict when the demand will increase or decrease and in that scenario, it can result in the wastages of food.

There are various Insurance coverage for a new motel or hotel business which can be taken to minimize risks-

1 General liability insurance - This protects the business from various risks like personal injuries, property damages, bodily injuries, etc which can arise from the business operations.

2 Workers compensation- If any employee is injured during the work then this it helps in taking care of the medical expenses.

3 Auto liability insurance- If your motel is providing vehicle facilities to its customers then it is important to have this insurance because if any property damage or injury takes place in an accident then auto liability insurance will be required.

4 Foodborne illness liability- If any customer gets sick due to foodborne disease or contaminated food like E.coli, salmonella, etc, then this insurance will help to overcome any liability costs.

5 Premises pollution liability- If the air of the motel gets polluted or contaminated by mold or due to any other reasons then customers can get sick and you may face certain charges. This insurance will help in medical bills and cleanup costs.