By Donna Dailey for Inside Hospitality Solutions
As the saying goes, you don’t know what you don’t know. And when it comes to insurance for the hospitality industry, it’s all too easy to learn that the hard way.
Gregory & Appel Insurance have been guiding clients through the maze of insurance options and products since 1884. As independent risk management advisors, they’ve become specialists in the complex world of hospitality insurance, headed by the team of Scott McGinness and Terry Ford.
McGinness established the Indianapolis-based agency’s niche in this sector some 30 years ago while working with former client RCI, which was founded in the city. His knowledge of resort insurance grew along with that now-global company.
Timeshare resort experience and knowledge is essential
Today, he and Ford serve hospitality businesses throughout the US and Mexico of all shapes and sizes, including international holiday exchange groups, management companies handling from just one to 150 vacation properties, self-managed resorts, and HOAs.
“We found that most of the existing insurance products out there were designed for hotels or apartments, and not for timeshare,” McGinness recalled. “And timeshare has some unique qualities, so those products don’t exactly fit right. In addition, we’ve got a number of parties we need to protect, from the board members and directors to the management and exchange companies. So we’ve had to modify products over the years to meet the needs of the insured.”
Another hurdle the team sometimes runs into with underwriters is a stigma against timeshares. And there is the inevitable comparison of the industry with hotels.
“We point out that most people staying at timeshares are owners, so they take pride in the resort and make an effort to take care of it,” McGinness said. “Unlike a hotel, where people are just coming and going, most owners don’t want to make a claim against their own resort.”
Gregory & Appel have lined up a good stable of carriers who understand the business. However, as more and more resorts develop mixed-used facilities, he explained that to get them adequately insured, you need to make sure you have the proper endorsements on the policy.
“When you purchase hospitality insurance, you’re not just insuring the building,” Ford added. “The difference between Gregory & Appel and other brokers is that we are very cognizant of all those moving pieces.”
So what are those factors that make timeshare insurance unique?
As an example, McGinness cited a resort in Hawaii that suffered hurricane damage and couldn’t operate for six months. They had standard business interruption coverage, but it was not designed for timeshare. Thus, the policy did not cover the reimbursement of maintenance fees to members who now couldn’t use the resort because it wasn’t written for that sort of exposure.
“It can all be corrected,” Ford said, “by working with someone who understands the industry inside and out. Who can explain the needs to the insurers. All of those lost pieces can be covered, but you have to ask for it.”
Gregory & Appel use several carriers who work with them to write a manuscripted endorsement to meet individual needs. “It’s not easy to do,” McGinness said. “Insurance companies are not usually willing to modify their policy forms.”
Each timeshare resort has different challenges
Since every resort is unique, on-site risk assessments are an essential part of their service. “We like to see a resort first-hand, or even attend board meetings to know what’s going on and identify risks,” McGinness said.
He recalled a physical inspection at a property with an indoor pool. They noticed areas of the deck floor were a bit slippery and recommended replacing them. But the resort didn’t follow through, and a few months later, an elderly guest slipped and hit his head, resulting in a $6 million claim.
“The risk control inspections enable a resort to correct and eliminate a problem,” McGinness said. “We can ask them to make physical changes, and they’re almost always glad they did.”
It can be easy to assume you are covered for situations when you’re not. For example, while inspecting a resort on a lake out west, Ford found issues with coverage on their marina. Under the policy they had, it wasn’t covered at all!
“It’s not unusual for a resort manager to know nothing about insurance,” he said. “HOAs, too, are usually run by good-hearted volunteers who may not understand what’s required. It’s that missing educational piece, and people not knowing what questions to ask.”
Such attention to detail doesn’t necessarily lead to more costly premiums. For example, McGinness was asked by a management company to review the insurance contracts for three resorts it had acquired. He discovered multiple errors in the policy documents, even the wrong number of units.
“We worked with the existing carrier to give them the correct information and diagrams of the properties,” he said. “The insurer felt more comfortable and actually reduced the price, even though they were covering more units.”
How Gregory & Appel can assist
Gregory & Appel also has a claim advocacy department that helps clients get through the claim process, which can sometimes be messy.
“Putting together an insurance program is like a puzzle that we have to piece together,” McGinness said. “We might use carrier A for the property, carrier B for general liability, carrier C for marina coverage. And when a loss occurs, with our claim advocates ready to help the insured, that is our opportunity to really shine.”
To learn more about Gregory & Appel, visit their Supplier Listing in the IHS Supplier Directory.