Unpredictable Weather: Understanding the Risk and Protecting Your Property
By Fran Sarmiento Executive Vice President, Venture Insurance Programs | April 28, 2013
Ocean or bay view? At some hotels and resorts, it's a common enough question. But what if they are one and the same?
Even before "Superstorm" Sandy left the Northeast reeling, rising sea levels were altering the geographic outline of our coast. Tornadoes, a common threat in the Midwest, have wreaked havoc in more parts of the country, and wildfires, mudslides, dust storms and drought have devastated parts of the West and Southwest.
While the hotel industry has come a long way in preparing for the disasters that weather can bring, today's new unpredictable weather has become a critical issue for hotels and resorts. Severe weather rarely threatens the existence of a business, but it can jeopardize growth and cause volatility in earnings.
You can take steps to protect your property and your guests from this ever-changing climate. Specific risk management practices and disaster preparedness plans will help reduce or eliminate the potential loss. But you also must have adequate insurance, both property insurance with the dollar limits you need, as well as business interruption coverage with protection from loss of income.
Insurance Rates and Availability
How do the recent changes in weather patterns affect your ability to get adequate property insurance? Insurance rates for commercial property coverage are likely to rise throughout 2013 due to Superstorm Sandy and several other large catastrophe losses. These increases will vary depending on location.
Deductibles are increasing as well, not only for wind and flood exposures, but also for all other perils such as fire, theft and vandalism. In fact, it is not uncommon to see property deductibles on larger hotels increasing to between $10,000 and $25,000.