Hotel Insurance and Risk Management Beginner’s Guide

Keeping your guests happy is your priority when you manage a hotel. Happy guests and better reviews will give you more guests.


There are many other things that you also have to manage. One of them is a risk management program.

An effective risk management program can help you focus on what you do best:

Making your guests happy

In this article, we will highlight the top risks in the hotel industry. We will also share how you can manage them with hotel insurance.

Like all businesses, there are risks specific to the industry. I bet that you have experienced them. Just that you do not view them as risks.

1. Property Damage

What is your most important asset?

Of course, it is your hotel. Can you imagine what can happen when there are damages to your hotel?

Do not think it will happen?

Why not consider the fire that broke out at Mandarin Orchard in March 2016? Or the fire that broke out at Tang Plaza (where Marriot Hotel is) in the same month?

If a fire can occur in their building, it can also happen in yours.

Why is that so?

Then nature of operating a hotel is that you will have many strangers in your premise. Strangers whom you never see before. They are your guests. But you have no control over what they will do.

You will face higher risks when you have other buildings near your hotel. Fire occurring in those buildings might affect your premise.

Fire is only one risk area. How about other forms of damage?

Singapore is a safe country.

But there is one big threat over recent years. It is something that the Singapore government has emphasised many times:


Mr. Lee Hsien Loong, the Singapore Prime Minister, has also revealed that there are some terrorist plans to attack Singapore.

The Singapore government has been successful in preventing them. I hope that they will continue to do so.

But relying on their vigilance will not do you any good. You are a businessman. You should take a more proactive approach.

How can You Protect Your Hotel?

You can protect your hotel with 2 ways:

  1. Having a sound evacuation plan and thorough training programme for your staffs;
  2. Buying insurance on your property.

Both are important.

With a sound evacuation plan, you will be able to protect the lives of your guests. This is more important than anything else.

You can achieve this by having a thorough training programme for your staff.

In your training, make sure you conduct simulation on emergencies. Your staff should be able to make decisions fast.

What should they do when there is a fire? Who should they contact? Should they verify it before announcing?

These are all important questions to consider.

But with all your best efforts, luck may not be at your side.

This is how insurance will help you.

The insurance company can indemnify for your losses should such events occur. Although there will still be damages to your hotel, you will at least have the resources to rebuild it.

2. Compromising Your Customers’ Data

In the course of your business, I believe you have collected your customer data. These data consists of their names, email address, or even credit card information.

Imagine what if an unauthorised person gain access to these data?

There are lots of reasons why these could happen?

First, your staff may be dishonest. They can sell these data to external parties.

Second, your system may not be secured. External parties may hack into your system to access the data.

Third, scammers can phish for data. They can pose as your staff and ask for sensitive information. There are also creative ways like food delivery or WIFI.

Your hotel is not at fault.

But your guests will blame you. Blame you for not warning them. Your business is about keeping guests happy. You can only accept the blame.

How Can You Protect Your Guest’s Data?

First, think of how your guest data can be compromised?

Are you using an external system to store the data? What is your payment gateway? Are they trustworthy?

If you have a budget, you can get a professional white hat hacker to test your system.

Second, you also have place measures to warn your guests against phishing. Have your check-in staff remind your guests to always call the reception number.

Finally, you should consider getting a cyber risk insurance. A cyber risk insurance should be your last line of defence. In case your system still got hacked, you can claim from cyber risk insurance.

3. Guests getting injured in your business premise

Although you are the owner of your hotel, you may not have complete control of your guest’s movement.

Imagine this scenario:

Your staff is cleaning your hotel lobby. It is a routine work. But this time round, he forgot to put a warning sign. He has a bad day.

Kids of your guests are running around. They are kids after all. But one of them slipped and fell. His head hit a sharp corner of the table just beside him.

His parents would not be happy. He will demand why your staff did not put a warning sign. He will ask for compensation.

The Singapore’s Innkeepers Act limits the liability of such injuries to S$500. For small hotels, S$500 per injury can be a dent to your cash flows.

How Can You Protect Yourself From Lawsuit Relating to Guest’s Injury

Prevention is always the best risk management. Conduct a check on all potentials risk areas where your guest can injure themselves.

The most common way your guest can injure themselves is slipping and falling.

Make sure that your floor is not slippery. If there is any puddle of water, always fix the source or clean it up.

Also, provide non-slip mat in the guest room, especially if your bathroom tiles are smooth.

The second best method is …

I am sure you have guessed it.

Buy an insurance.

You can insure for such risks with a public liability insurance.

Public liability insurance will cover your compensations and related legal costs.

4. Employee’s Injury

Your guests are not the only one that can injure themselves. Your employees can also be a risk factor.

Like your guests, your employees can also slip and fall. There are many other reasons on how your employees suffer injuries.

Under the Work Injury Compensation Act (WICA), you are responsible for your employees’ work-related injuries.

Your injured employee can claim:

  1. Wages during the medical leave due to work-related injury;
  2. Medical expenses incurred; and
  3. Lump sum compensation for permanent incapacity or death.

These are your obligations as an employer.

The good thing is:

You can meet these obligations by buying a Work Injury Compensation (WIC) insurance.

Please contact us if you want to learn how much a WIC insurance cost.


Hotels, like any other industry, has its specific risks. Having a risk management program frees up your attention to focus on more important tasks.

Anthola is a general insurance agency. With more than 30 years of experiences, we have advised our client on their risk management programs.

Do you want to start a risk management program for your hotel? Contact us for a free consultation. We love to speak to you!

Contact Us for Free Consultation

Or call us at +65 6298-6222.