The novel coronavirus affected every type of business throughout the country. One business sector that was hit especially hard was the hospitality industry. Almost by definition, if people are staying in their home and not traveling, then they’re not using hotels and motels to sleep in, to conduct meetings, to entertain guests or host weddings, or even to eat in.
Some of the economic losses may be covered by business interruption insurance especially if the hotels and related businesses had insurance that covers losses due to government ordered shutdowns. Unfortunately, many business insurance policies only cover physical damage or damage to specific covered events such as hurricanes, tornadoes, and fires.
Risk and Insurance recently spoke with Christian Ryan who helped create a pandemic insurance called PathogenRx in partnership with Munich Re and a company named Metabiota. Ryan identified the following risks that hotels and the hospital industry should purchase insurance for, so that economic losses can be covered.
- Consumer concerns about returning to hotels. Even as some states lift restrictions, consumers may not be inclined to stay at hotels until there are treatments for COVID-19 or until there is a vaccine.
- Business customers will decline. During the pandemic, many businesses are working from home. Even when there is a hopeful resolution to the crisis, many businesses that have learned how to work virtually will be less likely to send their managers and employees to other states to conduct business, when they can chat and exchange documents online.
- A knowledge gap. As employees are laid off, many may not want to return to work or may have found new jobs by the time the hotels, restaurants, and other hospitality businesses reopen. New employees won’t understand how the company operates.
- As buildings are left vacant and security is lax, there may be more break-ins and theft of furniture, equipment, computer records, and other business assets. Hotels should work to retain and hire security personnel.
- Workers’ compensation claims. Employees who contract the disease may file workers’ compensation claims for occupational illnesses. Whether workers’ compensation will pay for COVID-19 illnesses or death is not clear and will be decided on a state-by-state basis.
- Insurance premiums. Hotels and other hospitality businesses still need to protect their company from hurricanes, fires, theft, and other losses, even if their business is forced to shut down.
There are other risks while hotels and motels aren’t being operated. For example, an undetected slow leak, or even a burst pipe, can lead to mold which will need to be remediated.
When disaster strikes, hotel operators in Alabama, Florida, Louisiana, and across the Southeast will need experienced insurance dispute lawyers on their side. Warhurst Law can help. To learn if you have a business insurance claim due for your losses, call Warhurst Law at 251.207.1296 or fill out our contact form to schedule an appointment. We are experienced hospitality insurance lawyers who represent clients in the Southeast including Alabama, the Florida panhandle, and Louisiana.
* Warhurst Law cannot and does not guarantee an outcome to any case.