The Hindu Business Line : Hotel federation pitches for `joint cover' scheme

CLOSE on the heels of the Union Tourism Ministry amending its guidelines towards the requirement of Public Liability Insurance coverage for different categories of hotels, the Federation of Hotel & Restaurant Associations of India (FHRAI) has taken the initiative to convince its members to opt for a "joint insurance" policy.

All the hotels will be singly and severally covered under this policy and for any incident involving public liability, a participating hotel would be entitled to receive the claim. In such a situation, FHRAI examines, the over all premium for each hotel will be much less than what it will have to pay for individual insurance policy.

The federation is understood to have informed its members that it is working out the details of the scheme and will be in touch with the Department of Tourism for its approval on this procedure. The members have been asked to send their views on the matter.

The Department of Tourism has recently amended the requirement of Public Liability Insurance coverage, stipulating that 5-star and 5-star deluxe hotels should have annual insurance liability of Rs 4 crore, while in the case of 4-star, it should be Rs 4 crore. The 3-star, 2-star and 1-star categories should have liabilities of Rs 3 crore and Rs 1 crore respectively.The federation feels that the amended guidelines may work in favour of chain hotels and against independent properties. The chain hotels take the insurance for a sum, which works singly and severally for all their hotels. If a chain hotel takes an insurance policy of Rs 5 crore on this basis, all the properties will be included and any incident involving public liability in any of the properties will be covered with this amount.

In such a case, the premium will be higher on the basis of number of properties, but they will pay only marginally higher amount for each propertyMoreover, if there is an incident involving injury or death in a hotel which may result in a claim by the aggrieved party, compensation whether paid by hotel or by insurance company, cannot be paid without orders of a competent court. Considering all these factors, the federation has taken the initiative to examine a joint insurance policy for its members.