Hospitality industry insurance costs are rising across the board these days, following in line with many other industry sectors.

These insurance plans, which apply not only to lodging establishments but also restaurants and bars, are increasing for some obvious reasons as well as some less-than-obvious ones.

Based on the latest research on hospitality business insurance rates, these are the main reasons why bar, restaurant, and hotel/motel owners are seeing their premiums going higher over the past couple of years and likely into the future.

1. Property Values and Size

Property values are on the rise and while this is good for property owners, it means higher hospitality industry insurance costs to protect that property.

Along with the value of the physical property itself, policies also take into account the size of the establishment and the value of the equipment, furnishing, signage, décor, and stock when valuing the property.

2. Natural Disasters and Catastrophic Events

As natural disasters are becoming more common, the cost of damages incurred by hospitality industry businesses during these events is skyrocketing.

Additionally, fires and other catastrophic events are more common in certain types of establishments, only adding to the massive damages the industry sees on a year-to-year basis. Hospitality insurance plans continue to rise across the board as more claims come in for these reasons.

3. Building Costs

Along with other inflating prices, the costs of building materials and labor have all increased significantly over the past few years as well.

In terms of business insurance for bars, restaurants, and other hospitality industry businesses, these increases further add to policy premium increases as construction and repairs simply cost more now.

4. Supply Chain Issues

From construction materials to the items and stock required to run hospitality businesses, continued supply chain issues have affected many industries.

Hospitality industry insurance reflects these shortages in the ways that they reduce business profitability, either by slowing repair costs or preventing hospitality businesses from offering their usual services or menu selections.

5. Alcohol Sales

Alcohol sales or the total gross amount of alcohol sold is a prime factor in some hospitality insurance plans.

Insurance carriers find that the more alcohol sold by an establishment, the greater its risk exposure.

Many insurers will not carry bars and other alcohol-serving businesses for this reason.

Those who will insure this type of risk do so at a rate that acknowledges the higher risk level.

6. Social Issues

A variety of growing social issues is contributing to the rise in hospitality business insurance premiums today, as establishments like bars and restaurants have been significantly affected by them.

Damage due to social unrest has increased in many areas, while litigation resulting in massive settlements has skyrocketed.

7. Reinsurance Rates

With so many risks and increasing losses, many agencies offering hospitality industry insurance take out their own reinsurance to help them provide all of this protection to their customers.

Reinsurance agencies themselves are increasing premiums to insurance carriers, who are simply passing the added costs on to their business owner customers.

Keep Hospitality Insurance Plans Lower With Good Risk Prevention

As the cost of hospitality insurance plans continues to rise, many business owners are feeling the pinch.

The best way to limit the effects of these rising costs is to practice good risk prevention.

Discuss the different ways of risk prevention that can be done with an experienced agency offering business insurance for bars, restaurants, and lodging establishments to learn how to get the most coverage for the lowest cost.