Under the Hotel Proprietors Act 1956 (HPA), there's a strict (no negligence required) obligation on the part of all UK hotels to compensate guests for room losses up to £50 per article and £100 in total.
However, under the new London Local Authorities Bill, these compensation costs will increase to up to £750 per item and £1,500 in total for hotels in London, and the rest of the country could follow suit in the not-too-distant future.
Traditionally, HPA claims are excluded from any UK liability insurance cover as they're considereda management issue rather than an insurance matter.
The key to keeping uninsured costs under control is prevention and careful management of compensation claims when they arise. Preventive risk-control measures include regular checking of the locks on doors and windows and the employment of security personnel. In particular, introduce strict rules on the issue and use of master keys, or consider an alternative to swipe cards. When in use, closed-circuit television (CCTV) enables hotel staff to oversee the activities in the main areas and corridors of the hotel and also to review activities when a theft has occurred.
Careful management of claims for loss or damage can mitigate the total loss. Ask guests to report their loss in writing and to provide as much evidence to support the claim as possible. It's surprising how many claims for valuable items can turn out to be replacable at a far lower cost if you politely but firmly request original receipts. An insurance broker or total incident management provider can provide you with appropriate systems and check lists.
- Consider installing CCTV.
- Ensure that all locks on doors are checked regularly, and review procedures relating to master keys. Check swipe card read-outs are working correctly.
- Where keys are still used, ensure guests hand them in when they leave.
- Ensure that every claim is recorded and reported to the police. Obtain full inventory of losses and insist on seeing receipts/invoices.
- Review staff training to stop unauthorised guests entering rooms during cleaning, and look again at procedures for logging and storing items left behind by guests.
- Ensure the room directory reminds guests that the hotel offers safe facilities for valuables, and that unless they're deposited the hotel cannot accept responsibility for losses.
- Remember to display a copy of the new act's provisions once it comes into force.
The new regulations relate to every claim, so a series of thefts across 10 rooms could expose your hotel to 10 uninsured losses of up to £1,500 each, or £15,000 in total
Alexander Forbes Corporate Risk Solutions
Alexander Forbes House
6 Bevis Marks
Tel: 020 7933 0000
British Hospitality Association
55-56 Lincoln's Inn Fields
The problem You're the manager of a busy London hotel. A break-in has resulted in a number of thefts from ground-floor rooms, with guests demanding compensation. Under the Hotel Proprietors Act, your liability is limited to compensation of up to £100 per room, but the new London Local Authorities Bill, which is likely to become law this summer, will greatly increase this liability. You will be unable to insure against these losses and will be forced to meet the claims out of your own resources.