Summary: Part 1 in this series covered an introduction to insurance, an outline on the EC Directive, the basics of risk management, and financial guarantees. Parts 2 and 3 looked at liability insurance, Part 4 continued the subject of liability with specific reference to the Road Accident Fund in South Africa, and Part 5 dealt with Vehicle insurance.
Part 6 deals with Property Insurance and Travel/Medical Rescue Insurance.
TYPES OF INSURANCE
The five kinds of insurance that apply to the tourism industry are:
1. Financial Guarantee (Insurance Bond) – Read Part 1 HERE.
2. Liability Insurance:
• General Public Liability – Read Part 2 HERE.
• Passenger Liability – Read Part 3 HERE.
• Road Accident Fund Amendment Bill – Read Part 4 HERE.
• Personal Accident insurance – Read Part 5 HERE.
• Professional Indemnity insurance – See Part 5.
3. Vehicle / Property Insurance
4. Travel Insurance / Medical Rescue
5. Other Business Insurance (Buy & Sell, Key Person, Provident Fund)
PROPERTY INSURANCE
This insurance covers basically two categories, that of the actual structure of the buildings and that of the actual contents.
Structural
This insurance will cover you in the event of your lodge or hotel being destroyed by fire, flood, wind, falling trees or any other such eventuality.
In the tourism industry, the biggest risk is usually fire and here once again, one must make sure that you are sufficiently covered to survive the cost of restoring your establishment to new at the current building costs.
Such insurance will exclude certain circumstances such as subsidence (the sinking down of land resulting from natural shifts or human activity) and will demand certain precautions in the event of lightning, etc.
Make sure to check that your policy covers any unusual construction materials such as thatch or indigenous wood and take note of any special requirements such as maintained fire breaks.
Two additional items that must be included in this cover are that of loss of income during the period of repair or rebuilding due to cancelled bookings and refunds and that of covering yourself against a claim from a neighbour in the event of a runaway fire, which could be proven to have originated on your farm or property.
Contents
This cover is for when you specifically wish to cover the contents of your hotel or lodge in the event of one of the above disasters happening. It is all very well rebuilding your establishment, but it is often more expensive to furnish it. Contents normally have to be itemised on a policy in order to justify replacement. The random theft of an item would also be covered under this insurance.
Extensions: The following is a list of some of the property insurance policy extensions, which can be included, either at an additional premium or included in the cover:
- Money held on your premises or in transit
- Computer equipment
- All Risk items as specified.
Fidelity: Loss of money or stock as a result of theft or fraud by your employees
Business Interruption: Loss of income as a result of one or more of the insured perils, including prevention of access and failure of public utilities
Machinery Breakdown: Cost of repairs or replacement of damaged machinery. Also extended to include any consequential loss of stock or income as a result of breakdown
Goods in transit
Contents cover: To cover all contents as per buildings, with optional theft cover
Accidental Damage: Accidental physical loss of or damage to your property at or about the premises not otherwise insured or for which insurance is available and described in terms of any other section (other than Business All Risks) listed in the index of the policy
Deterioration of Stock: normally for perishable goods as a result of an electrical fault or failure of supply
Glass: Loss of or damage to internal and external glass (including mirrors), signwriting and treatment thereon at your premises for which you are responsible
Office Contents: Loss of or damage to the contents (other than documents and electronic data processing equipment unless otherwise stated in the schedule) including landlord’s fixtures.
D. TRAVEL INSURANCE / MEDICAL RESCUE
This is insurance that only applies to the individual travelling. Such insurance is often compulsory in certain parts of the world, and as stated before, you should make this a compulsory condition for any clients using your facilities or travelling on any of your tours.
This insurance is usually purchased by the client when choosing the tour or package and is sold by agents all over the world. It covers the client against the following eventualities.
Cancellation
Should a client, prior to travelling, have to cancel their holiday for any legitimate reason, they would normally be subject to a cancellation penalty, which could cost them dearly. However if they carry this insurance and this eventuality does arise, then the policy would cover the penalty payable.
Curtailment
Should a client, whilst already on holiday, have to cancel their holiday for any reason, they would normally forfeit any amounts paid and still be liable for the whole cost of their booking. This insurance would compensate for the unused portion of their stay. Obviously, the reasons for such curtailment must be genuine.
Lost baggage and theft
This will cover the loss of baggage and other personal items while travelling, although they should be itemised beforehand. Should the client specifically wish to cover he loss of cash this can be covered but is very expensive. Obviously airlines cover baggage they have lost, and banks will cover lost travellers cheques, but this insurance is more far-reaching.
Medical and rescue
A huge fear for any traveller is that of falling ill whilst on holiday, or worse still, being involved in an accident in a foreign country.
Fortunately for clients travelling within Southern Africa, medical expenses are relatively low, but the cost is still a concern. This cover is very important and will cover clients for any major medical expenses and specifically in the case of hospitalisation.
What is also very important is that these policies will normally cover the medical rescue from the scene of the accident, and if necessary, the transfer of the client to any other hospital where better medical attention may be available.
These policies will also cover the repatriation of an injured client to their country of origin, if necessary, and the repatriation of the mortal remains should the accident prove to be fatal.
This insurance is not very expensive and yet many travellers will insist on travelling without it.
TIP: Remember when compiling your rooming lists or your tour mandates to record the details of each client’s insurance cover, so that in the event of them being ill or injured, you can access this information in order to alert their insurance company.
MEDICAL EVACUATION INSURANCE
If your accommodation establishment is located in a very remote area and you are concerned that this fact may inhibit your potential to attract tourists, you may want to consider taking out your own medical evacuation insurance.
These policies cover your guests the event of them sustaining a life threatening Medical Emergency following bodily injury or acute illness, where:
- Local facilities are not suitable to treat the medical condition
- You consider the local medical services available to be inadequate
- The attending doctor, in agreement with your guest, recommends hospitalisation of a kind not available locally. You will contact one of the specified service providers who will arrange, monitor, supervise and pay for the following services, which will then be reimbursed by underwriters:
- The evacuation of the guest to the nearest appropriate hospital
- The relocation, with or without medical supervision, by means considered to be suitable by you or the attending doctor (including ambulance, chartered or commercial flight or road transport) to a hospital more appropriately equipped for the particular emergency
- The repatriation, including road ambulance transfers, to and from the airports with necessary medical supervision to an appropriate hospital or other healthcare facility near the residence of your guest.
Remember that quite often the individual involved in an accident on your property or in one of your vehicles could be a staff member. It is advisable to have a clear policy in this regard. Most medical aids are adequate but, specifically with guides, a personal accident policy is advisable in the event of a vehicle accident in a remote area. However such cover is taken out in the individual’s name and would depend on company policy, risk and demand.
TIP: Part-time guides are not automatically covered for any medical emergency and should therefore carry their own private cover as they are in effect self-employed and therefore do not necessarily enjoy the benefits of a full time employee.
Read more in this series:
- Understanding Tourism Trade Insurance Part 1
- Understanding Tourism Trade Insurance Part 2
- Understanding Tourism Trade Insurance Part 3
- Understanding Tourism Trade Insurance Part 4
- Understanding Tourism Trade Insurance Part 5
- Understanding Tourism Trade Insurance Part 6
- Understanding Tourism Trade Insurance Part 7
