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7 Ways To Reduce Business Insurance Costs For The Hospitality Sector

24/7/2015

 
Lower Your Business Insurance Costs
Insurance is a fact of life for all businesses and it's important to ensure the right amount of coverage. You want to make sure that if there is a unexpected and costly incident within your business that it doesn't ruin your business financially. Despite its necessity there are a range of options available to hospitality businesses that want to reduce the cost of their business insurance premiums.

The cost of premiums reflect the probability that an insurance company will need to pay out a claim. It stands to reason then that the riskier the business, the higher the premium. Therefore any cost savings that you are going to make on your business insurance will come from showing insurance companies that you present less risk and a reduced probability that they will need pay out a claim. What follows is a number of suggestions to lower your business risk and reduce the cost of your business insurance premiums.

1. Install Risk Reducing Equipment.

One way to lower the cost of your premium is to check what discounts are on offer for installing items that lower your insurance risk. These items could include:

  • A burglar alarm
  • A fire alarm
  • Sprinklers
If your alarm systems are monitored 24-hours with an immediate response to any incident then you are more likely to qualify for a discount.

2. Prevent Injuries

Take steps to reduce the risk of incidents like slips and falls. If you can demonstrate the steps you have taken and provide evidence through things like documented policies and a log book, that injuries have been reduced or eliminated because of the steps you have taken, then you are more likely to receive a reduction in your insurance costs.

One simple method of doing this is to ensure that regular maintenance work is carried out on your premises. Ensure your restaurant or cafe has eliminated tripping hazards like loose rugs and wires as well as cracked pavement if you have an outdoor dining area or car park. Another area to consider is lighting. Ensuring corridors, stairs and outdoor areas are well-lit to reduce the likelihood that you will need to make a claim.

3. Bundle Your Policies

If you have a number of different policies across a number of different insurance providers then you might qualify for a discount if you bundle your policies together with one company. Just as a phone provider offers discounts for internet and phones the same is true with insurance.

4. Increase Your Excess

There is an argument to be made for increasing your excess to reduce your business insurance premium. By doing this you want to ensure that you can comfortably meet any excess payment in the event you do need to make a claim. However if you have taken other steps to reduce your risk and you reason that you are now less likely to make a claim then this strategy can make sense.

5. Analyse Your Policies

In most cases hospitality business will have more than one insurance policy. This leaves open the possibility that there is duplication in what is covered or even irrelevant clauses that aren't needed for a cafe or restaurant business. Carefully examine your policies to see if this is the case. This is especially true if the scope of your business has changed, especially when it comes to operations. It may be that you are covered for things that are no longer apply to your business.

6. Update Your Policy Details

As well as checking your existing policy when the operations of your business change, the same should be done when key employees change roles or leave your business. Examine your existing policies to ensure that those named on your insurance are still in the same role or with the business. Significant savings can be made when a higher risk employee is taken off an insurance policy and an employee with a lower risk is added. Hospitality businesses who have delivery vehicles should be particularly mindful of this avenue to cut the cost of insurance premiums.

7. Seek The Advice Of An Insurance Broker

There are a vast range of insurance providers and different insurance products available to hospitality businesses. To wade through this often complex maze it is a good idea to seek expert advice from someone who knows the industry well. An insurance broker will be able to give you advice on a range of different products, prices and policy coverage. They can identify what exactly you're covered for, where there might be gaps or where there is duplication.

Many hospitality business owners go out and find insurance on their own thinking that will save them money. However they lack the expertise needed when shopping around for the most cost effective insurance option. This can lead to a restaurant or cafe with the wrong type of product for their needs. Insurance brokers are usually free so it makes sense to use their advice. 

Bonus Tip: Join A Trade Organisation

Hospitality business owners looking to save on business insurance premiums should look to trade organisations or professional associations that they are members of for a better deal. If your not a member then it's worth investigating wether discounts on business insurance is a benefit of joining. Many of these organisations have struck deals with insurance companies and members can make use of significant discounts on top of the networking opportunities these associations present. A win-win outcome! 
We'd love to hear your thoughts. Are you a hospitality business owner who has a tip they can share on insurance costs?

Insurance Options For Hospitality Businesses

22/4/2015

 
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There are a range of different insurance options that particularly apply to hospitality businesses. This post will give you a run down of the different types available and what they cover.

Firstly though, you might be wondering why take out insurance for your hospitality business? Here are 5 good reasons why:

  • Increase credibility with customers
  • Protect your clients
  • Protect your employees
  • Protect against the unknown
  • Avoid financial ruin
The bottom line is that hospitality businesses can't take the risk of forgoing insurance. Let's explore the insurance options that could be applicable to your cafe or restaurant.

1. Public Liability Insurance

Public liability insurance covers you when a customer or member of the public suffers a loss or injury because of your business operation. For example someone slips on your floor.

2. Product Liability Insurance

Product liability insurance covers your business when customers are affected by one of your products. In the case of a hospitality business this is most likely to occur when a customer gets ill because of something they ate or drunk on your premises. 

3. Workers Compensation

Workers compensation covers the cost of benefits paid to an employee if they suffer an injury at work. Workers compensation is compulsory in Australia if you employ staff and pay wages (over $7,5000 in the case of NSW & VIC). It is levied by individual state governments so different rules, regulations and costs apply according to the location of your hospitality venue.

4. Theft 

Theft insurance covers you in the event that your premises is burgled. It covers the theft of your contents and your stock. It can also cover your contents and stock from attempted theft, an armed hold up or an assault. For example if your POS system was damaged but not stolen during an attempted robbery then theft insurance will cover this.

5. Money

Money insurance covers your hospitality business for the loss of money, cheques, credit cards, vouchers and cab charges that are held on your premises or while they are in transit. This type of insurance is a good option if your regularly carry money to the bank.

6. Fraud and Dishonesty

An insurance option that hopefully you won't ever have to call upon. It covers your hospitality business against the theft of businesses property or money by any of your employees. It also applies if an employee is colluding with others outside the business.

7. Property Contents

Property contents is insurance that covers you in the case of a major disaster. For example a fire, storm, lightning, explosion or earthquake. Flood insurance is normally not covered under this type of policy and should be looked at separately. Property contents will cover the cost of replacing items like refrigerators, ovens, tables and chairs and usually includes the removal of debris from your premises.

8. Equipment

What would you do if your freezer suddenly stopped working or your air conditioner broke down on a 40 degree day? It is most likely that your business would be unable or limited in its ability to trade. Equipment insurance covers you in the event of equipment breakdown like this.

9. Stock

You've protect the freezer with your equipment insurance but what about the stock in it? Deterioration of stock works side-by-side with equipment insurance. It will cover you against food spoilage when equipment fails.

10. Glass

For a hospitality business a shattered shop front is not a good look. It's also dangerous and leaves your premises exposed. Glass insurance will come in handy if there is an accidental breakage. It covers replacement of the glass, temporary security to protect your premises, any glass sign writing and the value of damaged stock as a result of the accident.

11. Business Interruption

Business interruption insurance covers you when circumstances out of your control force you to cease trading. A good way to think of business interruption insurance is that it picks up when your other insurance stops. So for example your premises might be insured in the event of a fire. Your policy may limit payment to the replacement of damaged contents but what about the loss of revenue resulting from the interruption? This is when business interruption insurance kicks in. 
Additional Sources: AAMI, Alianz, GIO, Connect Insurance.
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