A stalker videotaped Fox sportscaster Erin Andrews in her Nashville hotel room in 2008. Andrews sued the hotel for negligence. A jury verdict in Andrews’ favor brings the hotel’s share of the award to about $27 million.
With more than 52,000 hotels and motels in the U.S. producing $65.16 billion in industry revenue, hotels and motels are big business. That business is not without its risks, and unfortunately, hotels and motels are also frequently the target of lawsuits.
An unknown man received a key to Wall Street banker Alison Fournier’s room at a Starwood Hotel. He later climbed into bed with her. She sued. Hotel manager Tara Kimkee Tan went into labor during her shift at the Standard Hotel in New York City. Claiming she was rushed out carelessly by the hotel supervisors after delivery, wasn’t offered maternity leave, and was forced to work more than 80 hours a week, she sued the hotel for $10 million.
These high-profile cases provide examples of less common risks hotels face. More commonly faced risks are issues such as business interruption, utility interruption, harassment, equipment breakdown and crime.
“More common liabilities are slips and falls, bed bugs, and cases of harassment,” says LevelFirst Senior Underwriter and Broker and Hotel-Motel Specialist Michelle Shelton. “On the property side, you have theft, fire, tornados and hail damage. These are the more common threats.”
Shelton says that in addition to general liability and property, types of insurance hotels need, are required to have or may consider include workers comp, business insurance, employment practices liability (EPL) and umbrella liability.
“An umbrella liability claim kicks in when a general liability policy limits are reached,” Shelton explains. “EPL covers third party harassment claims such as an employee harassing a customer or third-party vendor.”
Shelton says that rural motels can face different risks that high-profile urban properties. While the high-profile claims receive media attention, the more frequent risks can be catastrophic for business, especially smaller operations.
“Many times hotel owners aren’t aware of all of the risks, don’t know what the coverages are and are reluctant to purchase them,” Shelton says. “A little knowledge can go a long way in protecting against these common risks.”