Hawaiʻi remains one of the most popular tourist destinations in the world, with business owners spending $1.72 billion on tourism in August 2024 alone, an 11.4% increase from August 2023. While this growth spurs profit potential for businesses in every industry, it also brings risks and additional considerations to your business’s insurance needs.
Versatile risk management strategies are key to making sure the growth potential of Hawaiʻi’s most famous industry does not negatively impact your business. Are you prepared for how the tourism industry may impact your insurance needs?
Why Liability Coverage is Important
Liability insurance protects businesses against a range of risks associated with increased tourism. General liability policies compensate businesses for weather-related damage and theft, but they also provide coverage for legal liabilities, property damage, and accidents, all of which may impact businesses more as they scale their operations to meet demand.
As foot traffic increases, physical assets such as furniture, vehicles, and machinery may be more likely to be damaged, misused, vandalized, or stolen. Liability coverage protects businesses from paying out of pocket to replace or repair their damaged physical assets.
Additionally, with more people interacting with your business, liability claims can become more common. Tourists are typically unfamiliar with the local safety issues and cautions, leading to far higher rates of injury and death compared to residents.
Tourist Drownings in Hawaiʻi
Tourists visiting Hawaiʻi are nearly 9 times more likely to drown than residents, with snorkeling accounting for the majority of incidents. This highlights the need for many local business owners to implement greater precautionary measures to protect their assets from potential legal liabilities tied to the growing influx of tourism.
Unlike other coastal destinations, Hawaiʻi lacks a continental shelf, causing swimmers to be pulled into deep water much more quickly. This danger extends beyond snorkeling accidents, affecting a range of water-related activities including at beachfront hotels, sailing tours, and water sports businesses.
Why Professional Liability Insurance is Important
For many businesses, tourist activity presents new challenges that can result in professional liabilities and legal expenses. For example, any business that provides a professional service, especially in the hospitality sector, can be liable for costly mistakes related to increased tourist activity.
If company personnel give tourists wrong information or a company agent misplaces a reservation and negatively impacts a tourist’s schedule, that business could be liable for damages.
A business insurance plan that includes professional liability coverage protects businesses from costly litigation in these and other circumstances.
Depending on the plan, the insurer may cover the legal expenses and settlements resulting from a case involving employee negligence. This is especially significant for businesses that coordinate events, services, and travel for tourists.
Why Commercial Auto Insurance is Important
With more tourists on the islands, the roads become more dangerous for your business’s drivers. This is not limited to businesses in the hospitality and tourism industries, such as the shuttle services business.
Any business that operates a company vehicle, including delivery vehicles, passenger transports, freight transports, and company cars should reassess their commercial auto insurance coverage to meet increased risks in tourist-heavy areas.
Commercial auto insurance policies protect company-owned vehicles from various types of damage, including theft and vandalism. Additionally, as tourists take scenic drives, hire ride services, and walk on foot, they pose an increased risk to businesses that may become liable for damages if their vehicles are involved in accidents.
Why Commercial Umbrella Insurance is Important
As tourist activity increases, businesses are at an increased risk for liabilities related to accidents, regardless of whether the business is in the tourism industry. Specific liability coverage protects businesses from specific circumstances but not all situations can be predicted, nor can the extent of the resulting damage.
Therefore, many business owners in Hawaiʻi opt for additional coverage in the form of commercial umbrella insurance. These policies cover liabilities that extend beyond the limits of the business’s other policies, further safeguarding businesses from additional costs related to tourist-related accidents.
Any business that hosts or benefits from large events such as conferences, parties, concerts, weddings, festivals, and anything that attracts large crowds should pay particular attention to commercial umbrella policies.
The extra liability coverage may be the difference between settling an incident easily and paying out-of-pocket for costly litigation related to an accident involving company property or employees.
Contact an Experienced Insurance Agency to Protect Your Business
The tourism industry in Hawaiʻi allows business owners to expand their profit projections due to the increased foot traffic in and around their businesses. However, tourists also present challenges as they increase accident risks on the roads, wear and tear on company assets, and the risk for professional liabilities.
Local business owners need versatile business insurance coverage that protects their assets, employees, and drivers against costly damages. Without sufficient liability coverage, accidents on company property can result in costly litigation while accidents on the road can result in out-of-pocket expenses that no business should have to pay.
Contact Atlas Insurance today to learn how we can create a business insurance plan that fills your specific coverage gaps. For nearly 100 years, our local team has served businesses in Hawaiʻi by protecting their property, vehicles, employees, clients, and reputations from the challenges of a growing tourism industry.