In the hospitality industry, it is vital to insure that your business is covered against all possible threats. Liability insurance provides cover for your business against the financial risk of being sued by a member of the public, says Gavin Courtenay, Managing Director of SATIB Insurance Brokers.
When guests or visitors are on your premises and they are injured or become ill as a result of you or your staff's negligence, which results in them suffering financial loss, and subsequently lodging a claim for compensation from you, then public liability insurance will pay for your legal defence costs, and if the court finds in the complainant's favour, the costs of the claim up to the indemnity limit.
Certain funding bodies, tourism trade associations such as the Southern African Tourism Services Association (SATSA) and certain government regulations require tourism businesses to have public liability insurance in place.
If a tourist were to institute a claim against a tourism service provider that does not have liability insurance, then both the owners of the business and their employees’ financial future may be in trouble. Added to this is the fact that a claim that is not honoured may have a negative effect on both the tourism industry and the country as a whole.
General Public (and Products) Liability business insurance covers a range of accidents or incidents that might occur while guests or visitors are on your premises, where you have been judged to be negligent. You may be deemed to be negligent if you do (or fail to do) something without a reasonable amount of care, or fail to prevent an accident because you did not take enough care to avoid the accident occurring.
Liability claims will be influenced by:
• Whether negligence can be proven - was your company at fault?
• Whether an indemnity form was signed - was the client made aware of any risk and did they sign the indemnity form?
• Whether everything is accurately recorded and statements that are made are comprehensive - how did your company handle the situation after the event?
• Whether a company complies with all the local laws of the industry – are you licensed appropriately and do your staff members have the necessary training?
• Whether a company admits guilt.
In a Nutshell:
Public Liability Insurance
• Transfers the risk of being sued for negligence.
• Covers you for damage to third party property.
• The amount of cover (indemnity) needed depends on affordability - rather over insure than under insure i. e. more is better than less.
A guest walks into a hotel lobby and slips on a wet floor. He is injured and no signage is present to warn that the floor is wet and slippery. He claims financial compensation for his hospital bills from the hotel. General Public Liability insurance would pay for this situation.
Accident - an unexpected and undesirable event, especially one resulting in damage or harm
Compensation - money, in payment for loss
Guilt - responsibility for wrongdoing
Incident - an event that has potentially serious results
Indemnity - a sum of money paid in compensation
Insurance - financial protection against loss or harm
Liability - obligation under law
Negligence - civil wrong causing injury or harm
Premium - cost of insurance
Third party - somebody involved by chance
Tip: Contact the services of a tourism–specific emergency response call centre as your liability for decisions made in a crisis will then be transferred and the incident recorded for future reference.
Tip: As liability insurance is negligence based (i. e. negligence must be proven in a court of law), it is important to ensure that the policy does not cap (limit) legal costs.