Hawaiʻi is a popular tourist destination, which is great for a variety of businesses. However, high tourism traffic also leads to an increase in liability risks for many in the hospitality industry. Both seasonal and year-round businesses need Hawaii business insurance that covers both common and uncommon liabilities under one policy roof.
We’ve compiled the top 5 risks facing hospitality businesses in Hawaiʻi. To prepare for tourist season, review this checklist to make sure your business is protected with the right coverages and amounts.
Liability Claims
Business liability insurance tops this list for a reason, including accident liability, workers’ compensation, and more. This broad coverage protects a business from a variety of damages resulting from claims such as:
- On-site Injuries
- Traffic Accidents
- Property Loss or Damage
Many businesses in the hospitality industry offer on-site services to tourists. It’s their responsibility to make sure these visitors are well-informed and safe during their stay. Yet, according to long-term studies by the Hawaiʻi State Department of Health, tourists are 9 times more likely to drown than residents. This risk results in enormous pressure on hospitality businesses to protect their financial assets with comprehensive business liability insurance.
However, on-site injuries resulting from accidents are not the only risk businesses should be aware of. Hotels, agencies, and other hospitality businesses often transport guests and goods in company vehicles, which can be liable for costly medical claims in the event of an accident. Most hospitality businesses are also responsible for their visitors’ property. If items are stolen or damaged on the premises, the business could be liable for the cost of replacing them.
Business liability insurance helps hospitality businesses predict and prepare for these events with comprehensive coverage. Not all businesses operate vehicles, handle luggage, schedule trips, transport passengers, or operate near the water. For those that do, they require versatile coverage customized to their needs.
Weather Damage
For a hospitality business, profits depend on remaining open during high tourist peaks, especially for seasonal businesses. However, buildings, outdoor assets, vehicles, and other amenities are exposed to Hawaiʻi’s tumultuous weather all year round. Insurance policies that can be adjusted to accommodate seasonal peaks keep a business protected year-round without draining financial resources.
Windstorms and ocean waves impact Hawaiʻi hospitality businesses by destroying assets and damaging buildings. Heavy rainfall from tropical storms or seasonal showers can lead to flooding, damaging buildings, vehicles, and other property. Yet, not all businesses will be impacted by these events equally. The right policies and amounts can be determined through a risk analysis with your insurance provider.
Business Interruption
In all locations and seasons, the risks listed above can cause a business to temporarily close. Property damage resulting from weather or other events can impact a critical asset or amenity, rendering a facility non-operational.
Regardless of the cause, business interruption leads to lost revenue. For seasonal businesses, this disruption can bring financial crisis. The right business insurance can provide coverage for lost revenue during these circumstances, including temporary relocation costs.
Data Breaches
Modern hospitality businesses operate with some degree of digital infrastructure to store the payment and identifying information of employees and customers. Even with adequate cybersecurity solutions, hackers can breach systems, steal employee login credentials, or bypass firewalls.
An average of $4.88 million in losses per breach were reported in 2024, 10% higher than in 2023. Direct and indirect losses related to data breaches include loss of consumer trust and financial liabilities. Hospitality businesses can avoid adding to these statistics with updated cybersecurity solutions, employee training, and cyber liability insurance.
Event Liability
Many hospitality businesses host parties, weddings, fundraisers, festivals, concerts, meetings, and more. This puts the business in the important position of being responsible for large groups of people. In the event of an accident, a mismanaged venue, or another disaster, the hospitality business could be liable for injuries, property damage, or even loss of life.
Commercial umbrella insurance can address liabilities related to these and other events occurring outside of normal business hours.
Contact Atlas for Hospitality Business Insurance in Hawaiʻi
The hospitality industry is one of Hawaiʻi’s most thriving and rewarding professions. However, operating a hotel or other business in Hawaiʻi requires preparing for certain risks, including those directly related to hospitality operations and those faced by every business on the islands.
At Atlas Insurance, our agents build on nearly a century of experience helping local hospitality businesses prepare for all potential risks. Contact our team today to learn how the right business insurance can protect your hospitality business.