Competition among bed & breakfasts, a thriving sector in the hospitality industry, has led many B&Bs to expand their offerings to include activities that promise a more adventure-based stay—creating exposures that provide agents and brokers inroads to new or expanded business.
According to the Professional Association of Innkeepers Inter-national (PAII), bed & breakfasts are a $3.4 billion industry. There are some 15,000 B&Bs operating in the United States, says PAII President & CEO Jay Karen. And while the number of locations has dropped from 17,000 in 2009, the industry remains healthy because the performance of the existing inns has been solid.
"Supply is down, but [business] is certainly up for B&Bs," says Karen. The recession, he explains, is causing many travelers to rethink big hotel chains and expensive flights, opting instead for closer-to-home, travel-by-car trips, wrapped around local activities.
Many inns are targeting this "staycation" crowd with packages that include outdoorsy adventures like ATV trails, hiking, hot-air ballooning or even zip-lining. Others are offering home comforts like organic meals served from local farms, hot tubs with views of nature or local winery tours.
The clientele interested in such adventures are mainly Baby Boomers—older couples with empty nests, looking for comfort and adventure close to home, says Brent Skiles, assistant vice president of underwriting for Philadelphia Insurance Cos. in Bala Cynwyd, Pa. And so far, he adds, these expanded offerings have been good news for the B&B insurance market.
"From horseback riding to mountain biking, [B&Bs are seeing] increased exposures," says Skiles. What's more, B&Bs that are building new facilities—like henhouses, spas and stables—to accommodate new attractions are also increasing their property exposures, creating further selling opportunities for agents.
"I know one couple at a B&B where they've added a treehouse and yurts (tent-like portable housing) where you can stay, and added this exposure," he says. "They're catering toward a [more active] type of clientele from a liability standpoint. Their insurance agent needs to make sure [the insured is] covered."
But not all insurers want to take on exposures like zip-lining or mountain biking. Some insurance companies will package a B&B's coverages together, including those for the new offerings. In other cases, producers will need to turn to carriers that specialize in policies for activities like ATV riding or kayaking.
When it comes to some of the new exposures, Philadelphia Insurance Cos. has a Guides and Outfitters program through its Gillingham & Associates insurance arm to cover activities like hunting, boating, fishing, hiking, biking, photography tours and horseback riding. Outdoor Insurance Group of Louisville, Colo. offers stable and trail-ride insurance, coverage for ATV and snowmobile tours, and a B&B package that includes Equine Liability.
Veracity Insurance Solutions of Pleasant Grove, Utah, offers an Outdoor Recreation Insurance Program that includes several classes of adventure-like activities: trail rides, trap-shooting ranges, bicycle tours, canoes & kayaks, guided snowmobile tours and zip-line & canopy tours.
HOW AGENTS CAN COZY UP TO B&B BUSINESS
Bill Montgomery, owner of Insurance Works for You, a full-service independent agency in Dayton, Ohio, says the B&B industry is good business for an independent or brokerage, but it's a specialized area that requires education and attention.
"You have to have a certain desire to want to do it," he says. "It's not quick; you have to be willing to invest a certain amount of time" in learning how carriers determine rates for B&Bs. For one thing, he says, most insurers very much prefer that the owner or a manager live on the premises.
The insurance carriers he works with—among them Erie Insurance, a multiline insurer based in Erie, Pa.; Auto-Owners Insurance Co. in Lansing, Mich.; Western Reserve Mutual Casualty Co., Wooster, Ohio; and German Mutual Insurance in Napoleon, Ohio—are more open to quoting B&Bs from the straight bedroom-and-breakfast route, rather than those boasting newer amenities like massages, spas, horseback riding, canoeing or ATV trails, he says.
All B&Bs have to have General Liability and Property insurance, and if they have a liquor license, a Liquor Liability policy is also required, Montgomery says.
A typical commercial B&B coverage program such as the one offered by Montgomery's agency features replacement costs for building and contents; loss of business income up to 12 months; and liability that includes bodily injury, property damage, the host's liquor liability and personal property.
Insuring the B&B market is not a cookie-cutter operation, Montgomery adds: "Our job is to tell them their liability limits, not price. Every B&B is a different operation, and they need appropriate liability cover."
GROWING CYBER EXPOSURES
Skiles says more innkeepers are starting to look at Cyber insurance after hearing of other B&Bs experiencing exposures in this area. In one such case, an employee at one well-known bed & breakfast posted personal information about a celebrity guest's stay on the business' Facebook page, much to that guest's dismay.
Such a slip of the fingers is not covered under General Liability, he notes, should the celebrity or any B&B guest wish to sue for invasion of privacy.
And while large data breaches are not that common in the B&B industry, insurance agents would still do well to encourage B&B owners to look into a Cyber policy, says Skiles.
Even a small breach, he points out, could be costly if the inn has to hire a third party to inform everyone on its mailing list that its customer database has been compromised. The B&B could have to pay up to $200 per identity stored in its data files, to clean up the mess.
Indeed, opportunity exists for agents to open a conversation about Cyber coverage, especially with the most Internet-active B&B clients—many of whom don't realize they need coverage.
"It's a piece of the insurance conversation that probably nobody else has had with the insured," adds Skiles—and an opportunity for selling.
Dave and Heidi Lanford, for example, who run the Iris Inn in Waynesboro, Va., do not have Cyber Liability as part of their commercial-insurance package, although they maintain a Facebook presence, a Twitter page and a blog on their company website. Before speaking with NU, they had never heard of this coverage line—even though Heidi Lanford serves as vice president of the Bed & Breakfast Association of Virginia.
17 Sep, 2012
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Source: http://www.propertycasualty360.com/2012/09/17/bed-breakfast-market-warms-up-with-new-coverage-o?ref=rss
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