Losses to resort properties can often be enormous in terms of monetary damages as they are often built in areas that may have high risk factors such as flooding, windstorm damage, hurricanes and exposure from earthquakes. Tutwiler & Associates has been retained on all types of hotel and motel losses due to fire, floods, hurricanes, builders risk policies, and broken water pipes to name a few. Given the complex and often expensive construction and finishing in high end hotels, it is important that a thorough risk analysis be completed on a regular basis with an update on coverage limits for contents as well as building limits.
One of the challenges in this class of property is when a loss occurs, the complete property may have to be shut down even if some areas are still operational. One factor that may come into play are building officials, who in the interest of public life, health and safety issues, may require the property to be completely closed until all repairs are completed to building and health code requirements currently in place. This is especially true for older properties who lose their grandfather status regarding building codes. If this happens, the hotel may have to be brought up to the new code which can be very expensive. Things like fire systems, sprinklers, and many others may have to be completed before the building can be reopened. Property owners need to discuss the insurance issues that will be involved in a post-loss environment such as actual cash value, law and ordinance issues, as well as large hurricane deductibles.
Our experience indicates that special care should be taken when undertaking emergency repairs. Hastily attempted permeated repairs done incorrectly may result in more damage later and at greater repair cost. Special consideration needs to be given to emergency service contracts as it is not uncommon for unlicensed or unethical contractors to overcharge or do a poor job in order to make a quick buck in an emergency situation. Remember--the insurance company will only pay for your loss one time. Make sure you do it right the first time.
Given the quick response of fire departments and coverage of safety systems many losses to these facilities are classified as a total loss. Owner and operators as well as their risk managers should be aware of co-insurance issues for underinsured properties.
One of the more memorable losses we have handled involved a large motel where the owner made the decision to reroof the entire complex with laborers from a labor pool. No permit was pulled and work commenced. The laborers attempted to nail the new roofing material over the old roof. The nails penetrated the roof and as a result the next rain caused the complete destruction of two complete floors in two buildings including all contents. Fortunately, the owner had an “All Risk” policy which did not have exclusion for stupidity, and as a result, we were able to collect for the loss in total, including business interruption.
The other issue may be the standards imposed on a hotel through a franchisee or licensing agreement with the parent organization that “flags” the hotel or resort. This can become very problematic in an insurance claim for damages as most insurance companies will say they are only responsible to pay the direct physical damages repair cost and not any cost to bring the hotel up to the standards required by the operating agreement. How this is worked out will also have a major impact on any business interruption or loss of income claim. Delay in reopening and the lost income to meet standards is not likely covered unless there has been a special endorsement added to the policy for extended period of loss.
Time share losses are also unique in that typically a time share project developer will sell all of the units to individuals who may then put them back into a rental pool to receive a portion of the rental income, rather than use their time. Some companies have developed business models where they manage different properties and pool the rentals. This company may also insure the properties and in some cases have multi-projects on one policy.
Should a loss occur to multi-time share properties at one time, as was the case in the 2004 Florida hurricanes, issues are often raised about the owners having an interest and say in the repair process, as well as assessments that are made by the management companies. There can be issues on the hurricane deductibles being pro-rated with the different complex’s insured on a master policy by a management company. Our experience is that owners of the time share units do want to have a say in the loss adjustment process but they may be precluded given that the named insured is the management company. Also time shares fall under a statute that applies to this type of ownership and not under the Florida condo statute.
Expect time share loss issues to be very complex and confusing following the next big hurricane strike in Florida.
For over 27 years hotel and time share owners, property managers and developers have turned to or referred their colleagues to Tutwiler & Associates. As experienced public adjusters, we understand the claims process and have all the resources to help you recover your claim. Our knowledge of the insurance policy, claims process, and field experience have yielded us a longstanding positive reputation in the industry.
We pride ourselves on obtaining the maximum claims settlement under your policy provisions so you can be paid to recover as quickly as possible.