Renewing a hotel package policy: the proposal form, sums insured and loss of profit

A hotel package policy is one contract that bundles several covers, each with its own general conditions and its own sum insured. Before renewal, check four things: the answers on the proposal form, whether each sum insured matches rebuilding or replacement cost, the deductible, and whether the loss of profit period and base match your season.

The renewal invitation arrives six weeks before expiry with last year's answers already printed on the form. The owner signs, the policy is filed, and the first real reading of it happens after a fire, a flood or a burst pipe. This article is a hotel insurance policy checklist for the weeks before renewal, built from the general conditions rather than an insurer's brochure, so the four decisions that decide what a claim pays are made before the contract, not after the loss.

What does a hotel package policy actually cover?#

A package is not one promise. It is several covers sold together, and each one has its own general conditions, its own exclusions and its own sum insured.

The fire section follows the Fire Insurance General Conditions published by the Insurance Association of Türkiye (TSB) (opens in a new tab) (7 November 2026): fire, lightning and explosion, and the smoke, steam and heat they cause, up to the sum insured. Earthquake and volcanic eruption, strikes, lockouts, riots, civil commotion and terrorism are excluded unless an additional agreement adds them. Snow weight, flood and inundation, landslide, storm, internal water, vehicle impact and malicious acts are also excluded unless added. Fire or explosion caused by one of these is still covered, which is a narrow comfort, not a substitute for the extension.

Loss of rent and loss of use, debris removal costs, and fire and explosion liability each need their own additional agreement. A hotel that loses three months of trading usually needs the first two.

Fire or explosion caused by an excluded peril is still covered.

Read the schedule, not the brochure. The schedule lists which extensions are active, at what limit, and with which deductible. Two hotels can hold the same printed package and different schedules. The compulsory duties are a separate map: some insurance is required by law before any contract is signed, and that is a different question from what the package pays for, as covered in which insurance is compulsory for a hotel in Türkiye.

Why does the proposal form decide whether a claim is paid?#

Because the answers on it become the risk the insurer agreed to carry. A wrong or missing answer can reduce a payment or cancel the contract after a loss.

The insurance provisions of the Turkish Commercial Code (opens in a new tab) (Mevzuat Bilgi Sistemi, consolidated text, 7 November 2026) set the rules. Article 1435: at the time of the contract the policyholder must disclose every important matter it knows or should know. A matter is important if withholding it, or stating it incompletely or wrongly, would have led the insurer not to make the contract or to make it on different terms. Anything the insurer asks in writing or orally counts as important until the contrary is proved. That is why a short form is not a lighter duty, it is a narrower one.

Article 1436: where the insurer uses a written questionnaire, the policyholder is not responsible for matters outside it, unless it concealed an important matter in bad faith. Answer the questions fully and add what a careful operator would volunteer.

Article 1439: if an important matter was not disclosed or was disclosed wrongly, the insurer may withdraw or ask for the premium difference. If the difference is not accepted within ten days, the insurer is treated as having withdrawn. Article 1440: withdrawal must be notified within fifteen days of the insurer learning of the breach. A late notice weakens the insurer's position, so keep the correspondence.

After a loss, a negligent breach reduces the payment according to the degree of negligence where it could have affected the amount or the occurrence of the loss. An intentional breach linked to the loss means the insurer owes nothing.

The answers that most often drift out of date are the ones nobody thinks of as risk: a new kitchen line, a spa, a pool, a generator, a storage area, a change of operator, a wing under renovation.

How do you set the sums insured for building, contents and stock?#

Set each sum insured at the full value of what it represents at the time of a loss, because a figure below that value is paid proportionally, not in full.

Article 1460 of the code defines the insured value as the full value of the insured interest, and Article 1461 caps the insurer's liability at the sum insured. The two sentences together explain most claim disputes. Article 1462: if the sum insured is below the insured value and only part of the interest is damaged, the insurer pays in the proportion of the sum insured to the insured value, unless agreed otherwise. For example, a building insured at three quarters of its value pays three quarters of a partial loss.

The Fire Insurance General Conditions repeat the same rule in section A.5, and add a route out: the policyholder may notify the insurer through a notary before a loss and pay the tariff premium difference so that any loss up to the sum insured is paid in full. Article 1463 closes the other side: any part of the sum insured above the value of the interest is invalid and the excess premium is refunded. Overinsuring does not buy extra protection.

For the building, use rebuilding cost, not book value. Book value falls with depreciation while construction costs do not, and the gap is where underinsurance lives. For contents, count by replacement cost room by room, including linen, televisions, kitchen equipment, pool plant and the back-office systems. For stock, measure at your peak, not at renewal: a hotel that renews in January with a low cellar and a low minibar count is insuring its quietest week.

What does loss of profit cover, and for how long?#

It replaces the gross profit you did not earn while the business was disrupted, plus the extra costs of limiting that loss, but only inside the maximum indemnity period written in the policy.

Section A.1 of the Fire-Related Loss of Profit General Conditions: the cover responds only if the property was damaged by a risk covered under a valid fire contract, and the fire insurer has paid that damage or accepted liability. A disputed fire claim holds the loss of profit claim with it. Loss of profit means the loss of gross profit within the indemnity period, from the fall in turnover and from the extra operating costs incurred to prevent that fall.

Section A.3: the insurer is liable from the loss until the disruption is fully removed, but never beyond the maximum indemnity period in the policy. That period is a number you choose, and it is the single most consequential number in the renewal. Section A.6: the sum insured is the estimated gross profit for the indemnity period and may be revised quarterly. If it falls below the gross profit rate applied to annual turnover, or to standard turnover where the period exceeds twelve months, the payment is reduced in that proportion. Section A.8: a time deductible, if agreed, may not be less than 72 hours. For a hotel with a small fire in one outlet, that is usually absorbable; for a seasonal hotel, the indemnity period matters far more than the hours.

Section B.1 sets the clocks: notify the insurer within five working days of learning of the loss, and file a detailed written claim within 30 days after the indemnity period ends. Diarize both dates on the day of the loss.

For a seasonal hotel, the indemnity period must cover rebuild time plus the months needed to refill rooms, and the gross profit base must be built from the same months. For example, a hotel that trades May to October and loses July cannot be made whole by a period that expires in September.

Where do guest and staff liabilities sit?#

Outside the fire section. Liability to guests and liability to staff are separate covers with separate limits, and fire and explosion liability needs an additional agreement before it responds at all.

Section A.3 of the fire general conditions lists fire and explosion liability among the covers that require an additional agreement. Without it, damage your operation causes to a neighbouring building is not the package's problem. Guest property is its own question, with its own rules on safes, car parks and the standard of care a hotel owes, as explained in whether a hotel is liable for guests' belongings. Staff injuries sit under employer's liability, which has its own reporting duties and its own relationship with the social security authority's recourse, covered in employer's liability insurance and SGK recourse after a staff accident.

Check whether each limit is per event or per year, and whether it is shared across sections. A single per-year limit consumed in August leaves December uncovered. Check the sub-limits too: theft, money, glass, works of art, and business equipment away from the premises are usually capped well below the main limit. Cyber incidents are a separate policy line and are not created by adding a word to the package.

A closed wing or a winter closure: what changes?#

Both the physical risk and the loss of profit base change, and both are matters the insurer asked about on the form.

An unoccupied or closed section carries different risks: water left in pipes, heating switched off, reduced foot traffic, and a fire that is discovered later than it would be in a working corridor. Tell the insurer before the closure, not after. A closed wing that appears on no form is exactly the kind of matter Article 1435 describes. Ask what conditions the insurer attaches to closure: weekly inspection, isolation of services, a minimum temperature, a named keyholder.

Loss of profit needs the same treatment. If the hotel earns nothing in January, an indemnity period that includes January is worth less than one that covers the trading months, and the gross profit base should reflect the season you actually trade. Reopening is a risk moment too: systems restarted, contractors on site, staff retrained. Put the reopening date in the file and confirm cover is back to full scope, and fold the whole cycle into the same operational approach as closing a seasonal hotel for winter.

What should you ask your broker in writing, and what file do you keep?#

Ask for the answers in writing so the file shows what you were told, and keep that file in a form someone else can open on the day of a loss.

Ask which extensions are active on the schedule and which are not, by name, and ask for the general conditions attached to the policy rather than a summary. Ask how each sum insured was calculated and what date the figures carry: a figure with no working behind it cannot be defended after a loss. Ask whether the loss of profit sum insured is proportional, what the maximum indemnity period is, and whether a time deductible applies. Ask what the insurer wants to know during the year: new outlets, capex above a threshold, closures, change of operator, long vacancies.

Incident records matter because a claim is built from them, as described in hotel incident reports: what to record after an accident, a theft or a dispute. Confirm the cover with a licensed broker and, where the wording is unclear, take advice on your own contract. No article, including this one, can read a policy it has not seen.

What to do next#

Open the current policy, put the schedule next to this checklist, and send your broker the questions in writing before the renewal date, not after. The proposal form, the sums insured, the deductible and the indemnity period are four decisions that decide what a claim actually pays, and all four are easier to change before the contract than after a loss.