Why hotel owners should invest in site pollution insurance

If the past year has taught the hotel industry anything, it’s to prepare for life’s unprecedented events. Take COVID-19 as an obvious example. Thousands of hotel managers and owners were forced to close their doors in 2020 and quickly adapt to new cleanliness and safety standards for guests once they reopened. Even now with hotels being close to normal operations, the risk of COVID-19 hasn’t simply vanished.

Recently, the nation watched in grief as the Champlain Towers South collapsed in Surfside, Fla. The building collapse impacted hotels and condominiums alike across the town. Now, owners and managers across the country are scrambling to inspect their own structures. 

To take a proactive approach, many hotel owners recognize that, in addition to inspecting and maintaining a sound physical structure, the best way to protect themselves, guests and nearby businesses is by taking a careful look at the appropriate insurance policies for their unique risk exposures. However, there is one aspect of insurance many owners overlook that can end up being costly in the end should there be a nearby disaster such as a condominium collapse like in Surfside.

The Hidden Dangers to Hotels

Pollutants can be detrimental to any hotel structure, and even guests, and it is essential that owners take these potential dangers into account. A pollutant typically is defined as any solid, liquid, gaseous or thermal irritant or contaminant. This includes smoke, vapor, soot, fumes, acids, alkalis, chemicals, hazardous substances, waste materials and mold, among others. 

When the Surfside building collapsed, many of these pollutants were released into the air. While the pollutants stemmed from the condo building itself, surrounding businesses, especially hotels, were impacted, raising awareness that these pollutants can have a lasting impact on them as well. 

Barring a catastrophic event such as a total collapse, a hotel’s structural integrity is paramount when it comes to the health and safety of its guests and surrounding structures. The main pollutant exposures that put hotels at risk are airborne particulates, dust and silica that could cause property damage to surrounding structures. Another exposure is the possibility of water intrusion—and where there’s water, there’s the potential for mold growth. Additionally, bodily injury in the form of respiratory distress or respiratory illness can occur, which could require the insured to pay for cleanup costs.

How Can Hotels Stay Protected Against Pollutant Risks? 

While hotel owners may think their insurance policies cover these areas, many exclude coverage when it comes to pollutants. Most general liability policies and property policies exclude pollution coverage or offer very limited coverage. A site pollution liability policy can provide the coverages needed that are otherwise excluded. 

Site pollution policies cover any pollution event and can be tailored to meet the needs of nearly any property type. Brokers who specialize in site pollution policies recommend hotels owners have a comprehensive policy in place extending to mold coverage and that includes any indoor pollutants that would otherwise be excluded from most property and general liability policies.

Be Proactive When It Comes to Environmental Risks

According to the National Association of Insurance Commissioners, the increase in the frequency and severity of environmental claims is expected to continue. If hotel owners are not thinking about the environmental risks to their properties, now is the time for them to engage in those conversations with brokers because every property holds different risks. 

For example, the owner of a hotel in the Northeast likely is not as worried about water damage and mold as the owner of a hotel in Florida, where the rainy and humid atmosphere is a hotbed for mold. For the Florida hotel, the broker can include a mold exclusion to the site pollution policy. The same applies where chemicals are concerned. Whether a property has exposure to chemical risks or not, the broker can structure the policy in a way that best suits the property owner’s needs for coverage. 

While pollutants may not be top of mind for hotel owners, they are certainly dangerous risk factors that can have a negative impact on guests and buildings. Following a devastating event like the Surfside collapse, owners should take this time to review their insurance policies and reach out to inquire about a site pollution policy based on their hotel’s specific needs.