If you’re in the hospitality business - whether you’re offering accommodation or running a restaurant - you’re likely looking forward to the upcoming winter school holidays. Part of your preparation should also include being aware of potential liability claims. Did you know that even if there is no negligence on the part of your establishment, you may still be faced with a third party liability claim? That’s why business liability insurance is essential.
What is business liability insurance?
Having appropriate public liability insurance is a first step to protecting yourself. Here’s what else you need to know.
As a going concern, your business faces several categories of risk for which you should consider protection. While it can be easy to determine the cost of replacing physical property - and insuring it for the appropriate amount - the risk of liability claims can be harder to assess. As society has become more aware of its rights, protecting your company against liability is now essential to secure its future.
That’s why business liability insurance is available to protect your business from potential exposure to public liability losses. This specialist cover can be added to your existing business policy for comprehensive business insurance.
Even with public liability insurance in place, you should still take steps to minimise your risk as part of your business operations. You should consider:
- Adding disclaimers to your process
- Using surveillance equipment
- Appropriate staff training
- Comprehensive risk planning
Make sure your liability insurance carries sufficient limits and that your premiums are up to date. You should disclose all material facts to your insurer.
What to know about public liability disclaimers
Disclaimers, also known as indemnities, exemptions, and exclusionary clauses, help mitigate the risk of legal action. These are agreements in which one party (the guest) holds another party (the host) harmless from liability that may result from a future event. Be aware that the Consumer Protection Act (CPA) outlines strict regulations around the use and enforceability of indemnity clauses. The CPA stipulates that these must be clearly drafted in plain language, be unambiguous, and be obviously displayed.
At Santam, we recommend that hospitality owners require their guests to sign a disclaimer. You should also have disclaimer signage present that can be clearly seen on arrival.
- The sign should be bright with large bold print and be clearly visible and legible at all times
- The disclaimer should be located where one would ordinarily expect to find a notice containing the terms governing the contract between the parties involved.
- The disclaimer should be in a location where it would be unlikely for a reasonable person to overlook it.
- The disclaimer should not be placed near or next to other notices, busy pictures, or adverts.
Staff must do all that could be considered necessary to advise or give notice of the disclaimer to other parties with whom the establishment deals. Disclaimers need to be fair, just and reasonable. They should be drafted by your attorney, who has insight into your business activities and situation.
Be aware that disclaimer enforceability cannot be back-dated. Once a party is proven to have read a disclaimer, he or she is legally bound by its terms.
How to handle risky and dangerous activities
Section 49 of the CPA acknowledges that some activities are especially risky and could result in serious injuries or even death. These include adventure sports, recreational or fitness facilities. In these cases, your patrons must be informed of the fact, nature and potential effect of the activity or service. The patron must understand the risk and sign the disclaimer to show their agreement.
Consider surveillance cameras
Even with a disclaimer in place, you still have a duty of care to the public, and you need to protect your establishment, your property, and that of your guests.
If you haven’t done so yet, consider adding cameras and other surveillance equipment. Once installed, you should let guests know that these are in place and that you must comply with privacy regulations.
With cameras on site, you can easily see what occurred when a liability claim is lodged, as well as if there was any negligence or fault on the part of your staff. This makes it easier to determine the appropriate remedy and resolve the dispute amicably.
Equip your staff to handle difficult issues
As the saying goes, you can’t please all the people all of the time. Situations will inevitably arise from time to time that require more delicacy and tact. Having clear procedures for handling issues and equipping your team to handle them can reduce the potential for legal action. Every staff member, from front of house to groundskeepers, must be comfortable stepping in where needed.
For restaurants, claims often centre on food preparation, making commercial kitchen insurance a must. Staff should be trained on proper hygiene and sanitation, and know what to do if a diner complains. And while you’re reviewing kitchen procedures, you should also make sure you’re taking proper precautions in case of fire.
If an incident does arise, you must submit your claim and all supporting information as soon as possible. This will ensure insurers have not been prejudiced, and they can actively defend your rights.
Develop a risk management approach for your business
Liability insurance is just one facet of comprehensive business insurance cover. To be fully protected, you should take a comprehensive view of your risks, including major-loss events - such as fires or floods - and for any other risks you face.
This is where a risk management approach can also help protect you. Start by noting down all the risks your business could face, and then look at how you can protect it. This could include reviewing your processes and procedures, and updating your policies.
For instance, a hotel risk management checklist could include scenarios such as business disruption due to fire or floods, the impact of fraud and theft, cybercrime, kitchen equipment failure, and more.
At Santam, we understand hospitality businesses are varied and face unique circumstances and risks. This sector is a vital part of the economy, creating jobs and providing much-needed services to many. That’s why our brokers understand the industry and can advise you on appropriate hotel insurance, b&b insurance, or other tailored cover, to manage your risk. Consult your broker or contact us directly to find out more.