October 1, 2016

The insured, an all-inclusive beachfront five-star hotel, experienced a loss due to a fire during its high season. This loss directly affected the lodging of an important part of their workforce, 250 employees who live at a great distance from the hotel.

The insured discussed three alternative scenarios with the insurance adjuster:

1. Termination of all the 250 employees who lived at the affected building, which would result in a significant reduction in the insured’s customer service capabilities and thus force lower occupation rates. This occupation rate reduction would directly impact the insured’s income and profit margins.
2. External lodging of all 250 employees in smaller, lower cost hotels or venues in the area. This would entail the cost of the lodging plus additional out-of-pocket transportation expenses for these employees to and from the hotel due to the distance from the insured’s property, as well as overtime pay and the administrative cost of organizing this new lodging and transportation scheme.
3. Provide lodging for all 250 employees in guest rooms of the insured’s property, with the corresponding implications of reducing the availability of rooms for guests and additional security measures to ensure guest comfort and safety.

During these discussions, the insurance adjuster reminded and instructed the insured to take any and all measures at their disposal to minimize the loss.