The importance of an independent broker

 In a time where insurance aggregators are on every other TV advert, it’s easy to be sucked in to believing this is the way to obtain your insurance quote. For business insurance, and especially for niche areas like B&B and guest house insurance, this certainly isn’t the case. 

There are many insurance companies out there that sell policies online that you might call ‘bog standard’, and more times than not they are completely inadequate. An independent insurance broker, especially those that specialise in the hospitality arena will understand these inadequacies and provide expert advice based on the customer’s needs.

Gary Hodgson, partner at family-owned Hodgson Insurance Services, tells Luxury Bed & Breakfast magazine: “There isn’t a standard B&B owner anymore. Not least with the rise of sites like Airbnb, owners are looking to stand out from the crowd, branching out in to different areas. Some now offer self-catering with access to the owner’s kitchens, some provide just a bed-only, some have a glamping pod in the back garden, and we even saw a case recently where the owners provided group bookings and the guests on arrival had to find their room keys in an ‘Escape Room’ type scenario. These are all different risks and an insurance policy that is right for one person could be completely inadequate for another.”

These are some of the B&B cover levels, terms and conditions that he says he would recommend customers check on their quotes:

• Public liability. We see customers all the time taking out a standard home insurance policy and assuming it includes public liability cover. In fact, a standard home policy excludes liability in respect of any business.
• Theft. Some policies exclude theft by guests, some cover it by forcible/violent entry only, the top B&B policies will include full theft by guests with no security conditions being in place.
• Security. Talking about security most guest house policies will insist on a minimum level of door & window security. This is fine if they’re in place. You could be refused a theft claim should these not be in place. Again, the top policies will have NO security terms for that peace of mind.
• Accidental damage. If the policy says it includes this cover, check whether this includes damage by guests. Many policies include accidental damage cover that applies only if caused by the B&B owners themselves.
• Personal contents. Most guest houses are owner occupied. Check that your personal contents are included as many policies only offer this as an optional extra. Some inadequate policies geared up for larger hotels may exclude this altogether.
• Personal contents away from home. Do you want to include that iPhone, camera or those jewellery items whilst you’re away from your B&B? Most guest houses insurance policies don’t even offer this as an optional extra, but many owners want this cover. If needed, a good insurance broker will be able to place you on the right policy.
• Claim excess. How much will you have to pay towards a claim? These can range from £100-£250 for a standard excess, but can easily be £350-750. Make sure you’re happy with the total excess you may have to pay in event of a claim.

A niche insurance broker should be aware of the all the above pitfalls and B&B policy terms, says Gary. “A broker should have a broad range of insurance schemes to cater for the wide variety of the modern-day owner and will be able to place the customer on the policy that most caters for their needs and with policy conditions that can be adhered to,” he says.

Local knowledge

A broker will have local knowledge of the area, including potential flood risks areas, and is able to check Food Standard Agency ratings and assess the area and property via Google maps and the like to help get the best deals.

“Based in Cornwall, we know the South West region well and know certain problem postcodes,” he says. “But over the years many of our customers are now spread all over the country, and we have as many customers right up in Scotland now as we do here in Cornwall. Although not local we’ve researched the issues Scottish B&B owners have, compared to other areas, cold weather and potential burst pipes being a known high risk. An insurance broker will understand these risks.”

If you have to make a claim, you’re not on your own if you have bought your policy through a broker, he says. “Although you’ll generally deal with a claims team or loss adjuster, sometimes problems or hold ups occur. A broker will be on hand to assist their customer and act as a middle man to help push a claim forward or assist with disputes and settlements,” he concludes.

Caveat emptor

 Technical services manager Shaune Worrall at the British Insurance Brokers Association tells Luxury Bed & Breakfast magazine: “I’d certainly advice B&B owners to use a broker when they are looking for insurance cover unless they have insurance expertise themselves. It’s a bit like anything: you go online and buy after making a judgement based on your own expertise – it’s still a matter of buyer beware.

“A broker will have plenty of access to insurers and information to be able to signpost anyone with a B&B to the right cover,” he says.

Bespoke insurance

Insurance brokers have access to a vast range and variety of insurance products that they can offer their clients covering out-of-the-ordinary risks that can affect the B&B sector.

Coversure franchisee John Palmer, whose business is in Poole, Dorset, tells Luxury Bed & Breakfast magazine: “A visitor to Be My Guest in Bournemouth last month told us their property’s insurance policy was renewal due soon. I called them the day after the event and found the policy they bought online was completely wrong for them. Not only does it fail to provide them with appropriate levels of cover, but there are certain things they believed to be covered by the policy, but which quite simply are not,” he says.

The B&B owners concerned have a three-bedroomed property where they live at the back of their B&B, he says. “One of the starkest examples was that while their business equipment is covered, the same is not true for their own personal contents. This is a B&B, which is their home as well as their business.”

Before discovering this shortfall in their policy, when he was going through the questions with them, the B&B owner and client-to-be, said: “Of course we have got contents cover!” It turned out they haven’t, he says.

The premium they were paying for this inadequate policy was about £1,250, and the broker was able to arrange them a full policy including cover for their own personal contents for the considerably cheaper price of £550.

Sum insured

One of the areas commonly overlooked is careful consideration of the actual amount to be covered. John says: “As with all types of insurance, if you look at your own personal household insurance that may cover you for £50,000 or £100,000 insurance, it’s very much a finger-in-the-air, stab in the dark, ‘I think that’s roughly what I’ve got’.

“The biggest thing you need to protect against is unfortunately the worst-case scenario, which is basically a fire,” he says. “Someone breaking in and stealing a few things is horrendous, but it isn’t the end of your livelihood and your home. If your house or your business burns down, you can have the property rebuilt, but you can’t actually get back the contents that were inside, and that’s the end of the story. Most people can’t just put their hand in their pocket and replace everything in their home.”

He adds that although that is a specific example, it is the kind of thing insurance brokers deal with every day.

Client site visits 

One of the biggest benefits of being local is being able to go out on site when there has been a nasty incident and a horrendous insurance claim. As a local broker we are only 10 to 15 minutes’ away and we can go, take a look, make a call, or people can come in and see us. That gives client real peace of mind,” he says.

If necessary, someone from the brokerage can come out and meet you face to face, he says. “You are not on hold for 25 to 30 minutes trying to get through to someone, you have the continuity of dealing with the same person all the time so they know you, they know what is going on, and you don’t need to re-explain your circumstances.

Unlike online quote engines, brokers don’t have anywhere to hide, so they need to make sure that their claims service is up to scratch, because that underpins their reputation. “Our shop window literally has to be our claims service, otherwise we are not really adding any value at all,” he concludes.

Due diligence 

When you are choosing a broker, look for one with expertise and experience in arranging cover for B&Bs. There isn’t a huge difference in risk between a relatively ordinary B&B and a luxury B&B beyond a difference between perhaps the items owned by the guests and those owned the B&B owners that would need to be properly covered in order to reflect the cost of replacing them. There might then be issues relating to the security requirements the insurer may impose to reflect the exposure to risk, the excesses and the extended cover they might give.

The broker can guide you to ensure that you have identified properly the replacement costs, the things insurers won’t insure you for, and risks you may not have thought about that an off the shelf, internet-generated policy might or might not cover for you. The broker can make sure the limits are ok, make sure any warranty exclusions are brought to your attention and are acceptable, and will be there in the event of a claim. 

Despite the tempting ease with which online insurance can be found and bought, you really deserve better than a one-size-fits-all solution at your luxury B&B. What a broker can do is marry your particular risk, your particular business and your particular exposures to what is available out there in the insurance market.