Most business and leisure travelers focus on comfort, cleanliness, convenience and price when picking a hotel, as well as deciding whether to dine in-house or go out on the town when they are on the road. But insurers in the increasingly niche-driven hospitality market must check out a facility's unique approach and amenities before checking in with a coverage package, leading underwriters contend.

Complicating the niche-driven hotel segment is the fact that the market is "very competitive" at the moment, according to Jonathan Klein, secretary and treasurer for West Paterson, N.J.-based Klein Insurance Services Inc.

Although he doesn't see any major changes in the near future, Mr. Klein said the market tends to ebb and flow with insurer appetites to take on the peculiar risks of the hospitality market. While some companies have operated consistently in the sector, Mr. Klein noted that many tend to move in and out.

"Underwriters think they understand our business," he said, "but then when the losses come, they get out."

The key to covering hospitality risks, he suggested, is to look beyond the obvious--at factors such as how the hotel is managed, which can indicate how well it will be maintained, which leads directly to what risks a carrier might face.

Much of the exposure for hotels, Mr. Klein noted, involves the potential for injuries to customers--"slips and falls"--covered by a general liability coverage.

However, as the hotel industry develops and grows, and other developments occur throughout the world, new risks are emerging as well, warned John Braschi, product director for commercial business for Fireman's Fund Insurance Company.

Much of this is due to new innovations and amenities that hotels are introducing to lure businesses--such as water slides, fitness centers and even "hotels within hotels" (in which a hotel might have an even higher-class area within its property).

Additionally, hotels face special risks based on the fact that their customers are travelers, Mr. Braschi noted--citing communicable diseases such as Avian Flu or SARS, "all of which present different kinds of exposures that were not present even five years ago."

He said that Fireman's Fund offers coverage to hotels of any size, from small motels to large chains, but that it also seeks the "value buyer" who would offer their clients more amenities and would thus expect broader coverage from their insurer.

Sue Miller, a hospitality industry development executive and vice president at Fireman's Fund, said building that expertise has been a focus for the company for the past few years as it seeks to separate itself from the competition.

"Everybody can write a hotel," she said, "but customers are looking for someone who can write it well" while providing risk management and knowledge of the current issues within the hospitality industry, in addition to coverage.

Even within the hotel industry, there are some niche specialties--most notably those programs aimed at bed-and-breakfast-style inns. Andi Silver, specialty lodging program manager for Markel insurance company in Glen Allen, Va., noted that the unique way in which most of these smaller businesses are operated can complicate how their coverage is written.

"B&Bs present a unique challenge because you have to combine personal lines coverage with a commercial policy," she said. "Since the insureds usually live on the premises, they are there to oversee the entire operation and lend a personal touch that you do not find in a larger hotel risk."

In terms of pricing trends, Mr. Braschi said the hospitality markets tend to have a very regional character.

As an example, he noted that capital for catastrophe coverage for hotels is moving away from the Gulf Coast region following record hurricane activity.

Mr. Klein noted a similar effect, which he attributed to the same reasons that carriers in other lines of commercial insurance are staying away from the region. "Our [hotel] customers have the same losses as any other business" in terms of their property coverage, he said.

In the B&B market, Ms. Silver said conditions have remained fairly level over the past year.

"Rates have leveled off over the past 12 months," she said--adding, however, that many carriers "suffered last year due to the heavy wildfires out west and the hurricanes in the east."

Since travelers need to eat as well as sleep, the restaurants that are so prevalent in most hotels large and small are also a part of the increasingly competitive hospitality insurance market.

Brian Evans, a leader in Swiss Re's commercial insurance E&S Individual Risk Underwriting Unit, confirmed that the competition between standard insurers and nonadmitted companies for restaurant risks is on the rise.

Like other businesses, Mr. Evans said general liability is an important part of covering a restaurant, but he also noted the importance of liquor liability coverage, which covers the business for the risks of serving alcohol--"or, more likely," he added, "overserving alcohol."

Liquor service can present a particular problem for insurers, he said, because the laws governing liability in that area vary depending on the jurisdiction. "Each state has its own set of statutes," he noted.

Mr. Evans said his unit specifically targets the market of chain restaurants but will also cover a few higher-end "white tablecloth" restaurants as well as some night clubs--although he noted the company shies away from adult-oriented "gentleman's" clubs.

"From our experience, standard lines companies have had an increased risk appetite for the chain restaurant business," he said. "Some of the business we're losing is going to the admitted market, where two years ago they wouldn't have written it."

Like Mr. Klein, however, Mr. Evans said the current state of the market "might just be that natural progression" of companies alternately seeking out and then pushing back from hospitality risks.