Hurricane season is here, and while many hotels and motels along the Gulf Coast and the eastern seaboard are still recovering from the impact of last year's storms, they now await any sign of this year's first tropical depression and its impending trajectory. In the last few years we've seen scores of lives lost and thousands of homes and businesses destroyed due to hurricanes.

However, while these storms seem get stronger and more numerous with every year, there are still several actions that hotel owners can do to be ready when the time comes.

Owners of boutique hotels and small chains know the threat of a disaster-related closure is especially great because they usually lack the financial resources for recovery, the ability to spread their risk across several geographic locations and other advantages that most large chains possess.

The plan

By developing an appropriate protocol, hotel owners can improve the chances their businesses will avoid closure should the worst happen. Here are some points to keep in mind:

  • Review your current insurance policy with your agent to understand what it covers and what it doesn't. It's critically important to protect your base assets with adequate insurance — your coverage should include your hotel's grounds, inventory, employees and guests.

  • There are a few insurance carriers that specialize in the hotel and hospitality industry; ask your agent which insurer is the best match for you.

  • Since most policies don't cover flood damage, you may need to buy separate insurance. Ask your agent about business-income-interruption and extra-expense insurance.

  • Consider how you'll pay creditors and employees, and also plan how you'll provide for your own income if your business is interrupted.

  • Ask your agent what records your insurance provider will want to see after an emergency and store them in a safe place.

  • Revisit your crisis-management plan on a regular basis: security and communications infrastructures should reflect the hotel's size and risk variables. Some insurance policies companies, such as Fireman's Fund, incorporate public relation services into their crisis coverage.

After the storm

Although insurance can help protect your hotel's assets, it alone can't assure the post-event viability of your business. Without a pre-defined plan to protect property, employees and guests and to resume business operations in the larger community context, most hotels find it very difficult to survive a business outage.

If you've suffered a loss, report the loss to your insurance agent as soon as possible. Provide a general description of the damage and, if possible, have your policy number handy. Make a note of the claims adjuster's name, telephone number and inspection schedule.

This year, as hurricane season approaches, everyone in the hospitality industry will be more aware of the threats than ever. With more advanced warning and better preparation, we'll be able to stem the tragedy and loss we've witnessed in recent years.

Sue Miller is vice president of commercial insurance for Fireman's Fund. Visit for more information and tools to help your business prepare.

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