Tag Archives: Loss Of Attraction

Hotel Industry Health Risk Management: Hotel Owners Should Negotiate “Loss Of Attraction” Or “Contingent Business Interruption” Insurance Coverage For Losses Arising From Bed Bug Infestation

“…many hotels have negotiated for “loss of attraction” coverage, which covers the actual loss a hotel might sustain if it had to cancel reservations or was unable to accept bookings due to an infestation.”

State inspectors have the authority to shut down an establishment that poses an "imminent health hazard" involving fire, flood, sewage backup, rodent infestation, bed bug infestation or "any other condition that could endanger the health and safety of guests, employees and the general public."

“I would say both business interruption and to some extent contingent business interruption are two of the most difficult values for a business to assess,” says Craig Lapsley, vice president at Travelers Global Technology.

In evaluating those risks, companies have to consider their earnings, operating expenses and payroll–which is often overlooked but should be included, he says. In addition, companies need to consider how long they could be out of business and how long it could take to get back up and running.

“It’s difficult for insurance professionals, who do it all the time, and it’s extremely confusing for insureds,” Lapsley says.

Whenever there are large losses or catastrophic events, a very large percentage of insureds invariably turn out to be underinsured when it comes to business income, he says.

What makes contingent business interruption particularly tricky to assess is that it involves operations that are outside the company’s direct control. A company’s own operations may be in fine working order, but it may nevertheless suffer a significant loss of business income because of a disruption in the neighborhood, or with one of its suppliers, or with one of its buyers.

 For more:  http://www.riskandinsurance.com/story.jsp?storyId=13708831

 

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