Taking the risk out of buying insurance
Buying the wrong insurance cover online can cost you dearly. We speak to Gary Hodgson, guesthouse insurance broker from Hodgson Insurance Services, who explains some of the risks B&B owners can avoid – and the savings they can make – if they approach an independent broker when their insurance policy comes up for renewal.
What are the benefits of using an insurance broker for B&B owners?
An insurance broker will bring many benefits for a B&B owner, they should have specific market knowledge and, as each risk will be different, they should also have an ability to compare a panel of different insurance providers, to find the right policy for the specific needs of the customer.
They will be on hand to give advice and make any changes throughout the life of the policy.
The insurance broker will be able to review the policy at each renewal time, automatically comparing against the market.
Assistance will always be available should the worst happen and a customer needs to make a claim, although many insurers will deal directly with the customer to settle claims, a broker will give any additional advice and be able to help should there be disputes at any stage. Generally saving B&B owners hours of time, so they can get on with running their business.
What are some potential issues for when a B&B owner buys cover online?
Some of the initial problems we hear from customers who’ve gone online filling in comparison site forms is that, before you know it, you have 10 companies calling you all asking different questions. These companies will often sell your data to other brands who will also contact you with offers and so on – and this is just from completing one online form.
Some direct insurers only deal in email, and if you need to make changes mid-term or cancel a policy you will usually see very high ‘admin’ charges. By contrast, independent insurance brokers will usually have sensible low fees for any such changes.
If you buy cover online, when it comes to making a claim it can be difficult to know who to call or to discuss the claim with, and many direct insurers farm their claims service out to foreign claim call centres where claim delays, disputes and lack of communication regularly happen.
Can the broker save money by choosing a B&B owner’s insurance and business needs?
For B&B customers looking to cover their personal contents or possessions, we always recommend finding an insurer that combines this option within the B&B package – many will do so.
How can you convince B&B owners that they will benefit from a broker?
Brokers do act as a ‘middleman’ and take a commission for finding customers the best policy, but in most cases a broker will save you money, especially if the broker specialises in your niche trade.
A direct insurer can only quote themselves, whereas a broker will have access to many insurers and niche schemes – giving more choice for the customer which in turn, generally means a better chance of finding a cheaper premium.
Comparison websites are geared up for simple car and home insurance policies. I’m not aware of any at present where you can compare B&Bs or guest house insurance packages instantly.
Have you had any clients who have bought the wrong type of cover online?
We’ve seen many times instances where customers have gone online on a home insurance comparison site, put in that they run a B&B and expected the policy to include liability cover, when in fact it’s just a standard home insurance policy giving them personal Public Liability cover only, and excluding all liability for guests.
We provided a recent quote for a guesthouse customer, and when we looked through their existing policy we picked up that it excluded flood cover, which the customer had not seen in the small print. We managed to find an appropriate policy that included flood cover and this was £90 cheaper than their current policy.
Have you ever been able to help elevate a claim, or correct an insurer that has stated the client isn’t covered?
We don’t see too many claim issues ourselves as we try to ensure as much as possible that the client is on a comprehensive policy with a reputable insurer.
We did have an issue where a claims loss adjuster initially refused a claim because he thought the client’s policy excluded a certain cover. The customer came back to us, we went straight to the loss adjuster and pointed out exactly where in the policy wording it confirmed cover was in place.
The loss adjuster agreed and the claim was soon settled in the client’s favour. If this had been a direct insurer the customer may not have known any different and would have had nobody else to assist and may have just accepted the loss adjusters’ views.
What are some sensible levels of excess for B&B owners buying cover?
A sensible level of standard claim excess for a small B&B would be £100-£150 up to £250 for a guesthouse or small hotel.
You can have an additional ‘voluntary’ excess on top, but insurers don’t allow much discount, so we rarely recommend making the excess higher, but sometimes a customer is happy to take a £500 excess to save £15. Subsidence will generally have a £1,000 set excess.
Are there any packages available for B&B owners which provide guest cover?
Yes. Specific B&B policies will automatically include public liability for guests in case of injury at the property. Some policies will give you the option to include guests’ personal effects in the bedrooms, but this is often an optional extra.
Do you have any examples of the most common claims made by independent hospitality owners?
We would say there are three common claims from B&B owners:
Escape of water claims
There’s generally more pipe work in B&Bs compared to the average domestic household, with all bedrooms typically having an ensuite nowadays. Burst pipes is one of the most regular, costly and damaging type of claims we see, and damage can comfortably run into the thousands of pounds. In addition, it can mean the B&B owner is unable to let bedrooms, which is why having Business Interruption cover on your B&B policy is extremely important.
Liability claims to guests
If a customer is hurt in any way whilst staying with you, then they could seek compensation from you for the injuries sustained. We’ve experienced claims relating to people falling downstairs, having a chair collapse underneath them, and in the last 12 months we’ve seen two guests claim for bedbug bites.
Such claims are not specific to B&B owners alone, but there are a high number of storm damage claims made. We recommend doing regular checks and keeping up with any necessary property maintenance, clearing gutters, and getting that slipped slate repaired.
Is there anything else that tends to surprise B&B owners when things go wrong?
Some of things we’ve seen that B&B owners are surprised about when we review their current policies include customers who’ve just taken out a standard home insurance policy and thinking it includes public liability cover for guests when in fact it doesn’t.
Most B&Bs are owner-occupied, but we’ve seen policies that haven’t included any personal contents. In addition, some customers want personal belongings covered whilst outside of the home, such as mobile phones or jewellery.
Many policies can be stripped back to get a cheaper price, so we often see covers like business interruption, employers’ liability, stock and even guest liability excluded when customers have been unaware of this. Unfortunately you sometimes get what you pay for in B&B insurance, and no one policy is the same.