AN ALPHABETICAL GUIDE TO SOUTH AFRICA’S MOST COMPREHENSIVE INSURANCE POLICY FOR B&B AND GUESTHOUSE OWNERS
Introduction
The purpose of this Dictionary is to assist guest house owners in understanding the B&B and guesthouse industry.
Disclaimer
Any information or suggested structures for insurances are by way of example and based on general information rather than client specific information. Should any of these suggestions appear to be relevant it is vital that these are discussed with the specific requirements of the policyholder in mind. Any information supplied by Incompass is intended to provide basic information only. Any of their information is not intended to be an endorsement by Incompass. It is the responsibility of each person making use of the Incompass dictionary to conduct further enquiries as needed, to check on the suitability of the service providers listed herein and the accuracy of the information. Furthermore, Incompass cannot guarantee the accuracy of any of the information listed in any article written by a third party or of any article contained in any website to which readers are referred.
Different insurance companies apply different definitions and policyholders or prospective policyholders must check with their broker or insurance company, the below is for guidance only and should be ratified.
AA Travel Guides
South Africa’s premier independent grading company offering “Quality Assured” accommodation in three categories being Recommended, Highly Recommended and Superior. For more information visit www.aatravel.co.za
ACCIDENTAL DAMAGE (BUILDINGS SECTION)
Examples are: hammering a nail into a wall whilst hanging a picture and rupturing a pipe or cable or putting your foot through the ceiling.
ALL RISKS
Insurance policy that covers losses from all causes not specifically excluded in the policy. opposite of named peril coverage.
ALL RISKS EXTENSION (CONTENTS SECTION)
Extends the cover of your contents insurance, for example for expensive items such as photography equipment took outside the house.
APPROVED ASSOCIATIONS FOR DISCOUNTS
- AA TRAVEL GUIDES
- BABASA CHAMBERS ACCOMMODATION
- FEDHASA (ALL THREE REGIONS)
- GUESTHOUSE ASSOCIATION
- NATIONAL ACCOM ASSOCIATION
- STAR GRADING COUNCIL
- MEMBERSHIP OF ANY PROVINCIAL ASSOCIATION ONLY
- MEMBERSHIP OF ANY LOCAL ASSOCIATION ONLY
AVERAGE
Average is the penalty that applies to a claim in the event of underinsurance and applies to the Buildings, Contents and Loss of Revenue sections of a policy.
BABASA
The Bed & Breakfast Association of South Africa. One of the three national bodies in South Africa, and the oldest of these bodies, specifically dealing in the B&B and guesthouse sector. For more information visit www.babasa.co.za
BACKPACKERS (Definition)
A Backpackers establishment is an accommodation facility that provides communal facilities, including dormitories yet may offer a range of alternative sleeping arrangements.
BED & BREAKFAST (Definition)
Bed and Breakfast accommodation is usually provided in a family (private) home and the owner/manager lives in the house or on the property. Breakfast is usually served. Bathroom facilities may or may not be en-suite and/or private. In general, the guest shares the public areas with the host family.
BICYCLES
Use of the insured’s bicycles by guests.
BILKING
The practice of leaving without paying the “bill”.
BOATS
Where canoes/rowing boats or sailing boats are used on inland waters.
BUILDINGS SECTION
This section of a policy covers loss or damage to the buildings including fixtures and fittings.
CANCELLATION OF A RESERVATION
Where a reservation is cancelled and such cancellation is beyond the control of the guest.
CLAIMS PREPARATION COSTS
The policy provision of cover against the costs of compiling a claim.
CONTENTS SECTION
This section of a policy covers loss or damage to property insured on both the personal and business aspects of the establishment.
CONTINUATION OF COVER
The premium is due in advance and, if not received by the company by due date, this insurance shall be deemed to have been cancelled at midnight on the last day of the preceding period of insurance unless the insured can show that failure to make payment was an error on the part of his bank or other paying agent.
COUNTRY HOUSE (Definition)
A Country House is a large Guest House, usually situated in natural, peaceful surroundings such as near a nature reserve, a forest, a lake etc. It offers all the services of a hotel, including dinner.
DEATH OF A KEY MEMBER
This covers Loss of Revenue following the death of a “key” member of the establishment being a spouse, partner or manager.
DISCLAIMER
Guest houses should consider the use of a disclaimer:
Guest/s attend this establishment at their own risk.
The Proprietor, is agent/s and/or its employee/s (“the Proprietor”) shall not be liable for, and the guest/s hereby waive/s and abandon/s any claims of whatever nature including but not limited to that for theft, injury, loss or damage of whatever nature, against the Proprietor, whether arising from the Proprietor’s default, negligence or otherwise.
The guest/s, in addition to the aforesaid, hereby indemnify the Proprietor against
any claims which may arise from whatever nature, whether arising from the Proprietor’s default, negligence or otherwise.
Whilst every endeavour is made in terms of the above recommendation to provide for the exclusion of an innkeeper’s liability, such liability or exclusion thereof is never absolute and is always subject to a matter of degree and the application of an appropriate court’s discretion.
It should also be borne in mind that court’s discretion is applied judicially but subject to the credibility and worthiness of appropriate evidence.
DISCOUNTS
Discounts to premiums on certain guest house insurance policies are available; typically an establishment needs to be a member of any of the insurers approved associations.
ELECTRONIC EQUIPMENT
Can also be covered under All Risks and should provide full power surge cover.
EMERGENCY ACCOMMODATION COSTS
Where an incident takes place more than am certain distance from home and accommodation is required.
EMPLOYER’S LIABILITY
Included under the liability section of a policy and essential for guesthouse owners employing staff.
ERRORS & OMISSIONS
An extension to the Liability section on policies, this cover protects the insured in the event of any act, advice, error or omission committed, or alleged to have been committed, subsequent to the effective date by or on behalf of the Insured in connection with the Insured’s business.
EXCESS WAIVER
The basic excess under a motor section can be cancelled if an additional premium is paid.
EXTENDED PASSENGER LIABILITY
This section of the policy can be taken out should the client be offering more than a b&b facility. Perhaps one partner runs the B&B or guesthouse and the other partner in the business has a tour operating company.
FATAL INJURY
In the event of fatal injury to the insured or guest occurring in or about the building(s) caused by accidental violent external visible means which injury shall solely and independently of any other cause result in death within a certain period.
FAIS ACT
This act governs the financial services sector in South Africa. It is necessary for intermediaries to show that they are “fit & proper” and also to be licensed in terms of the Act.
FSB
The Financial Services Board is a unique independent institution established by statute to oversee the South African Non-Banking Financial Services Industry in the public interest. Their mission is to promote sound and efficient financial institutions and services together with mechanisms for investor protection in the markets they supervise. For more information visit www.fsb.co.za
FAILURE OF ESSENTIAL EQUIPMENT
Any loss of revenue following the failure of “essential equipment”. Examples of such “essential equipment” could be air conditioning units in very hot summer regions.
FEDHASA
The Federated Hospitality Association of South Africa is divided into three regions in South Africa. The Inland Region covering Gauteng, Free State, North West, Mpumalanga and Limpopo. The East Coast Region looks after Kwa Zulu Natal and the Eastern Cape and the Western Cape Region takes care of the rest of the country. For more information visit www.fedhasa.co.za
FIDELITY
This section of a policy covers money or goods of the insured stolen by an employee who causes a financial loss to the insured.
FIRST AMOUNT PAYABLE
This is the amount the client is responsible for under the specific section when claiming.
FIRST LOSS
This indicates the maximum amount that the insured may claim in the event of a particular loss. If for example the insured feels that the security at their premises is so good that intruders will not be able to get away with more than a certain amount, they may insure for that amount only. Any loss in excess of the First Loss figure is not covered by the policy.
FORCIBLE AND VIOLENT ENTRY
There should be no requirements for forcible and violent entry to a premises used as a B&B or guesthouse but possibly for self catering or holiday homes at which there is no owner or manager. Forcible and violent entry requirements could be in place for premises such as conference centres situated some distance from the main building but this is subject to underwriting.
FUNERAL COSTS SECTION
The insured can purchase funeral cost, which covers their spouse, and any unmarried children under 21 or that are dependent on the insured.
GARDEN PLANTS
The Contents section is extended to cover loss or damage to garden plants up to following destruction by the fire department or if a vehicle drives over a plant. It does NOT cover loss or damage by storm or theft.
GHASA
Based in Cape Town the Guest House Accommodation of South Africa caters mainly for guesthouses in terms of the definition set out by the Grading Council. GHASA is a private company. For more information visit www.ghasa.co.za
GOODS IN THE OPEN
The policy covers loss by fire, storm or theft of laundry, garden furniture and implements including portable braais and lawnmowers and swimming pool equipment from the insured premises.
GOODS IN TRANSIT
Covers the insured for damage to property insured caused by (a) fire, lightning, explosion, collision or overturning of the vehicle (b) theft or attempted theft provided that goods in an unattended vehicle were concealed and entry was visible, forcible and violent whilst in transit between the place of purchase, repair or renovation and the insured’s residence, for holiday purposes, or following a permanent change of residence.
GRADING COUNCIL
The only officially government recognised grading system for many types of accommodation establishments. Recently the Grading Council introduced a grading system for restaurants. The Grading Council uses the internationally recognised “Star Grading” from one star to five stars. For more information visit www.tourismgrading.co.za. Some insurers offer a discount of up to 20% if an establishment is star graded (see Discounts)
GUESTHOUSE (Definition)
A guesthouse is a converted house, manor, etc adapted to accommodate overnight guests or it may be a purpose built facility. A guesthouse is run as a commercial operation and is often owner-managed. A guesthouse has public areas that are for the exclusive use of the guest. The owner/manager either lives off-site, or in a separate area within the property.
GUEST EFFECTS LIABILITY
South African law makes it a “Strict Liability” situation should a guest have goods stolen at an establishment. The South African courts have held on various occasions that “innkeepers” are responsible in the absence of gross negligence (on the part of the guest) or “vis major”, for loss of or damage to goods/movable items received by them without proof that they were negligent in any manner.
GUEST EFFECTS COVER (CONTENTS SECTION)
The contents section is extended to provide perils cover for the uninsured personal effects of a paying guest. This cover extends to goods contained in the guests motor vehicle subject to goods in a motor vehicle being concealed in a locked boot or in a storage compartment forming part of a locked vehicle.
GUESTS MEDICAL EVACUATION
This section of the policy pays for a guest who is seriously ill to be evacuated and admitted to hospital.
HOLIDAY HOMES (Definition)
A Holiday Home is a private type domestic residence that is rented on a self-catering basis.
HOSPITALISATION OF A KEY MEMBER
Loss of Revenue following the hospitalisation of a key member of the establishment being a spouse, partner or manager.
IMMIGRATION AMENDMENT ACT
Many accommodation establishment owners are unaware of the requirement that the Immigration Act has on their businesses. In terms of both the amendment act and the subsequent regulations, accommodation establishment owners are required to maintain a guest register and obtain and retain the following information on their guests –
- Full names of guests
- I.D. or Passport numbers
- Residential status in S.A (tourist, citizen or permanent resident)
- Residential address
- Signature
These records must be retained for a minimum period of 6 months and made available to the department representatives on request. The Department of Home Affairs does not prescribe the format for recording this information. That is entirely up to each business owner.
INSURANCE INSTITUTE OF SOUTH AFRICA
The Insurance Institute of South Africa is a non-profit, section 21 company engaged in the delivery of education, training and skills development to the insurance and related sectors. The IISA has positioned itself to be involved both in higher education academic qualifications and in vocational qualifications and vocational skills programmes. The Institute therefore looks to a blended educational delivery system, making use of appropriate electronic media as well. For more information visit www.iisa.co.za
LEGAL DEFENCE COSTS
This is an extremely important section of the policy as many policies in South Africa limit their legal defence costs.
LOCKS AND KEYS
The costs necessarily and reasonably incurred following loss of or damage to any locks or keys (including cardkeys and remote control devices) for the residence and its outbuildings.
LODGE (Definition)
A lodge is an accommodation facility located in natural surroundings. The rates charged are usually inclusive of an experience offered at the lodge, viz game drives, battlefield tours, etc. In general, food and beverage services are provided for all meals.
LOSS OF MONEY
Loss of money should be included within the Contents and All Risks sections.
LOSS OF REVENUE
The insured can cover their loss of revenue due to various insured interruptions with the business.
MEDICAL EXPENSES
Cover for any incident happening to a guest at the premises. An example of this is if intruders enter the premises and assault the guests.
MEDICAL MALPRACTICE
To protect the insured against any first aid treatment administered by the insured which causes injury.
MURDER
Loss of revenue as a result of a murder or any attempt thereat at the insured premises.
NAA-SA
The National Accommodation Association of South Africa is the largest of the associations acting on behalf of B&Bs and guesthouses in South Africa. The association originally started as a “bottom up” body where local associations affiliated to provincial bodies and then to the NAA but in recent times membership is available direct by establishments without the need to belong to a local association. For more information visit www.naa.co.za
NOISE POLLUTION (LOSS OF REVENUE SECTION)
Loss following interruption of or interference with the business by any event arising from abnormal noise at any neighbouring premises.
OMBUDSMAN FOR SHORT TERM INSURANCE
The purpose of the Short Term Insurance Ombudsman is to resolve disputes between members and insured consumers in an independent, impartial, cost effective, efficient, informal and fair way. For more information visit www.osti.co.za
POWER SURGE
PROPERTY OF EMPLOYEES
Cover for the insured’s domestic employees property whilst at the insured’s residence.
RAPE
Loss of revenue as a result of a rape or any attempt thereat at the insured premises.
REFRIGERATOR OR DEEP FREEZE CONTENTS
The deterioration of foodstuffs contained in any refrigerator/deep freeze unit in the residence as a result of breakdown, accidental damage or failure of power supply to the unit.
SAUMA
The South African Underwriting Managers Assoc is the voice of Underwriting
Managers as defined by Section 48(2) of the Insurance Act.
SELF-CATERING (Definition)
A self catering establishment is one where guests may hire a room, a suite or an entire cottage and instead of being provided with breakfast cater for this themselves. Any self-catering establishment NOT on the same premises as the owner or manager is underwritten according to individual risks.
STAFF STAY-AWAYS
The Revenue section covers loss following the interruption of or interference with the business resulting from staff stayaways, legal or otherwise.
STRICT LIABILITY (See Guest Effects Liability)
The legal position in regard to innkeepers (and this includes B&B and guesthouse owners) is relatively clear. In short, the innkeeper is to be liable tothe guest for any loss and /or damage sustained to items upon and stolen from the premises of the innkeeper, notwithstanding a lack of negligence on the part of the innkeeper and in the absence of the successful raising of a defence. The South African courts having held on various occasions that “innkeepers” are responsible in the absence of gross negligence (on the part of the guest) or “vis major”, for loss of or damage to goods/movable items received by them without proof that they were negligent in any manner.
SUICIDE
Loss of revenue as a result of a suicide at the insured premises.
TELEVISION SETS AND ANCILLARY EQUIPMENT
Cover for accidental damage (other than mechanical or electrical breakdown) to any television set, video recorder or its aerial in the residence.
TRAMPOLINES (Liability section)
The Liability section a policy may cover the use of trampolines at the premises but generally there must be a notice alongside the trampoline stating that use of the trampoline is at the risk of the user and the Insured accepts no liability for any accident or injury as a result of the use of the trampoline.
TRAUMA COUNSELLING (Contents & Motor sections)
Where the policy will pay the cost of trauma counselling as a result of any event following violence or the threat of violence at the establishment for guests but including away from the premises for the insured and permanent staff members.
TRAUMATIC EVENT (Revenue section)
Loss following interruption of or interference with the business by any event caused by any accidental, violent, external and visible means at the premises.
UNDERWRITING GUIDE
An underwriting guide forms part of this Dictionary and will assist in rating risks as well as establishing exactly what type of risks are written.
UNOCCUPIED PREMISES
Whereby the premises of a B&B or guesthouse is left unoccupied for a certain period of time larger excesses can apply.
VEHICLE PERMITS
Vehicle permits may be required in addition to the driver’s PDP if fare paying passengers are being carried. Establishments doing this sort of transportation should check this with their local vehicle licensing authority.