Hospitality Industry Business Risks: Hotel Owners Must Consider "Business Loss/Interruption Insurance" As Part Of Comprehensive "Disaster Insurance" Coverage

“…many hotels don’t have business interruption insurance because it comes with higher premiums and deductibles…(one hotel) close to the Kentucky Derby area was hit by a tornado…the hotel wasn’t damaged, but they lost all of their utilities. If they hadn’t had that business loss insurance, they would have lost all of that income they would have generated during the race.”

After two tornadoes hit the same Midwest region in the United States within a year and caused extensive hotel damage, disaster insurance deductibles are on the rise and hoteliers are mulling their coverage options.

• Higher deductibles – While premiums appear to be remaining steady, insurance companies in the Midwest are charging a higher rate of percentage deductibles to help keep costs down, he said. As an example, if a hotel had $100 million in coverage and there was a 5% deductible, the deductible would be $5 million.
• Wind and flood insurance premiums in the Midwest remain relatively flat overall, with slight increases for some hotels. In other parts of the country, such as coastal areas, the cost of wind and flood insurance has risen 8% to 10% on average, according to sources.
• Reinsurance options—insurance that is purchased by one insurance company from another—are available, as are percentage deductibles based on the amount of coverage rather than a flat rate.
• Wind deductible buy-back insurance—which provides a buy-back policy that reduces the higher percentage deductible—with deductibles most likely still will be higher than the flat deductibles previously offered.
• Storm surge coverage is available under a flood plan or wind storm plan. Some policies exclude floods altogether.
• Business loss/interruption insurance - Hotels impacted after the 9/11 terrorist attacks and hotels in California affected by the 1994 Northridge, California, earthquake would have benefited greatly from business loss/interruption insurance.

For more:  http://www.hotelnewsnow.com/Articles.aspx/8282/Hoteliers-mull-disaster-insurance-options