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Cover your assets: a series on insurance

January 8th, 2018 | | Accommodation

Part one: the basics

People in the youth tourism industry are a fun-loving bunch, but if I took a poll as to which aspects of operating a backpacker-related business are the most enjoyable, I don’t think dealing with insurance would rank very highly. However, ensuring your insurance is correctly sorted is one of the most critical aspects of business management. If you poorly manage your social media presence, you might lose some followers. If you poorly manage your insurance coverage, you might lose your business. So while this next bit may not be ery exciting it is ‘critically important’ to the good health of your business (or intending business). In this first instalment on a series about insurance, we’ll explain the two basic types: property and liability and see how they apply to backpacker operators.

Property 

First, It’s easy to understand that every business needs property insurance. This protects everything you spent to create your business, plus your profit. This profit element is what is sometimes overlooked. For example, a walking tour operator may not have a coach bus or a building and contents to insure, however, the right profits insurance would help the operator pay their bills if they broke their leg and could not offer the walking tours while they convalesce. Ensure your business has enough cover to pay its bills, including your wages, if for some reason it cannot trade (Think of it as salary continuance insurance for business owners).

Liability

The second type of insurance is liability, which covers your business when it causes someone else injury or damage to their property. Unlike property, liability needs to be more tailored to suit youth tourism operators. Liability policies frequently have limitations or exclusions that could leave a backpacker or tour operating business uncovered. For example, imagine a guest is playing soccer at your hostel, breaks his leg, and decides to sue. A liability policy that contains an athletics participation exclusion will not protect the hostel. Another common type of exclusion is for alcohol, which is frequently a factor in incidents involving youth tourism businesses. Besides specifically named exclusions, typical liability policies are restricted to the normal occupation of your business. If your hostel lends out surfboards, a normal liability policy might leave you uninsured given that surfing is not a primary part of your business. These types of gaps can present huge risks and thus it’s essential to ensure that your liability policy does not exclude circumstances that might be rare in other types of businesses, but are more common to backpacker hostels and youth tour operators.

Backpacker business insurance: same but different

Property and liability insurance are necessary for almost every kind of business. However, they are more tricky for backpacker businesses because of their unique high risk profile. A hiking tour is simply far more hazardous than selling coffee at a local cafe. Now that you understand the basics of property and liability insurance, in our next issue we will cover other common insurance pitfalls and how your youth tourism operation can avoid them.

For immediate piece of mind and a lookover your insurance needs have a chat with Fred or Andrew at AllsoppBunting Insurance – your insurance broking specialists. fred@allsoppbunting.com.au – 0419 296 031 or andrew@allsoppbunting.com.au – 0411 611 988. Or check out their new website for more details – www.allsoppbunting.com.au