Why You Need Guest House Insurance?

It is estimated that some 30,000 guest houses exist in South Africa and that less than half of these have the correct guest house insurance in place. There are many fundamental differences between Guest House Insurance and standard house insurance.

Many guest houses are covered simply by a normal house holder’s policy – in practice his cover is not only inadequate but also likely to be invalid.

Having the incorrect GUEST HOUSE insurance in place can have serious consequences and represents possibly the largest risk to any guest house owner.

Guest Houses and bed and breakfasts can be defined in many ways but the below should help you ascertain whether your property falls under the terminology of Guest House or Bed and Breakfast and as such needs as Guest House insurance cover:

  • B&B Definition and Guest House Definition: a building which is used for human habitation, has not more than one kitchen and is occupied by the owner and in which persons are accommodated on a temporary basis.
  • B&B Definition: a Bed and Breakfast accommodation is usually provided in a family (private) home and the owner/manager lives in the house or on the property. Breakfast is usually served. Bathroom facilities may or may not be en-suite and/or private. In general, the guest shares the public areas with the host family.
  • Guest House Definition: a Guest House is either a converted house, manor, etc adapted to accommodate overnight guests or it may be a purpose built facility. A guest house is run as a commercial operation and is often owner-managed. A guest house has public areas which are for the exclusive use of the guest. The owner/manager either lives off-site, or in a separate area within the property.
  • B&B Definition and Guest House Definition: a small house on the same property as a larger main house, used as for guests.
  • B&B Definition and Guest House Definition: a free-standing hotel unit, often like a cottage, rented to guests
  • B&B Definition and Guest House Definition: a small house or cottage adjacent to a main house, used for lodging guests.

Do You Have Insurance At All?

An insurance contract is matter of good faith between the insurer and insurance company. The insurance company accepts a premium from the insured and in return promises to pay out a certain amount of money in the event certain perils occur.

Insurance companies have risk profiles, rates and terms and conditions that are associated with specific risks. They rely on the insured to accurately specify what the risk is they are insuring against. As an obvious example: if someone was insuring a taxi cab the risk would be very different to that of a normal car. In the same instance a guest house is very different to normal private property.

Should a claim be made and the insurance company ascertains that they were not informed that the property was indeed a guest house and they have been insuring a private home, they have every right to refute the claim and declare the policy null and void, through non disclosure.

In summary, if you are a guest house with private home owners insurance there is a very good chance you do not have valid insurance in place. The consequences of this can be horrific – a house burning down for example could leave you literally homeless and with no ability to claim.

A private home owner’s policy simply does not do the job!

It’s The Wrong Cover

Guest houses have very different needs to private home owners: –

  • Higher risk dues to guests and staff
  • Business interruptions causing financial hardships
  • Unforeseen events such as mechanical breakdown, electrical failure and plumbing issues
  • Bilking – guests not paying their bills
  • Not being able to adhere to strict forcible and violent entry conditions
  • PUBLIC LIABILITY – the biggest of them all

There is little point paying for an insurance contract that does not cover the risks you face.

Guest house insurance is specially designed to cover guest houses, without it you risk your business, your family home and your financial future.

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