CLASSIFYING RISK–LODGING ESTABLISHMENTS–INCLUDING CASINOS

(April 2022)

INTRODUCTION

The first step in classifying a lodging risk involves gambling. If there is any gambling on the lodging premises, the Gambling-Casino classification must be considered. Only after determining that the Gambling-Casino classification is not appropriate can the other lodging classifications be considered.

CASINOS

Casinos may initially appear to be a lodging operation and subject to classification as a hotel or motel because the upper floors that are used for guest sleeping rooms make up the largest part of the premises. The grade and lower levels used for casino operations, bars, restaurants, shopping areas, and entertainment venues usually take up much less space. In most cases, parking garages and parking lots (including both valet and self-service parking) are located nearby.

However, when a casino is present, the entire risk, including the lodging, moves out of lodging and into gambling.

Class Code 43990: Gambling–Casinos is the classification that applies to casinos. This is the only classification necessary because the classification notes list and include virtually every possible activity that can take place at the casino operation. It does not require separate classification and rating. This classification is rated based on the total payroll of all employees of all named insureds.

Gambling, however, does not turn a hotel into a casino! According to the notes, Class Code 10015–Amusement Centers is used when the only gambling provided is through mechanical devices. This means hotels with electronic gambling do not use the Gambling-Casino classification but instead use the appropriate hotel classification along with the amusement center classification. However, if a hotel or motel has BOTH slot machines and blackjack tables it must be classified as casinos.

HOTEL/MOTEL CLASSIFICATIONS

Once the casino option is removed, there are four possible classifications for lodging exposures. The proper one to use is based on the number of stories in the building and whether or not a swimming pool or beach is available to the guests:

• Class Code 45190: Hotels and Motels–Less than Four Stories–With Pools or Beaches
• Class Code 45192: Hotels and Motels–Less than Four Stories–Without Pools or Beaches
• Class Code 45191: Hotels and Motels–Four or More Stories–With Pools or Beaches
• Class Code 45193: Hotels and Motels–Four or More Stories–Without Pools or Beaches

The notes for each of these classifications are identical, although the rates are different because of variations in exposure and experience.

The first exposure included without an additional charge is boats. CG 24 16–Canoes or Rowboats is used to provide coverage if the named insured owns canoes or rowboats. However, other types of watercraft are excluded, and a separate endorsement and premium charge is required if coverage on them is desired.

CG 20 08–Users of Golfmobiles is used to include as additional insureds users of golfmobiles. There is no charge for this endorsement. This suggests that coverage for use of golfmobiles is considered a normal hotel/motel exposure.

CG 22 45–Exclusion–Specified Therapeutic or Cosmetic Services must be attached to exclude professional services. This suggests that the liability exposure for these types of services could be considered part of the business and included without an additional premium charge but that all professional liability exposures must be excluded.

The end of the notes section addresses specific exposures that some lodging risks may have that require separate classification and rating:

• Boats, other than owned canoes and rowboats

The ISO Commercial General Liability (CGL) Coverage Form provides narrow and limited coverage for canoes or rowboats. The additional premium charge is for boats described on CG 24 12–Boats.

• Gasoline stations. This includes oil supply stations.
• Golf courses but only if the hotel charges for a round of golf. If the lodging includes access to the resort’s golf course as a part of the hotel base rate, no separate classification or premium is required
• Health or exercise facilities that charge for use of their facilities

Hotels that have health or exercise facilities for guest use included in the room charge are included. Class Code 44315: Health or Exercise Facilities–Commercially Operated is used for facilities that charge a fee.

• Restaurants
• Ski lifts or tows

This note does not distinguish between operations that charge with those that do not. As a result, hotels that operate ski lifts, tow facilities, or runs without an additional charge to guests are still subject to separate classification and rating under Class Code 48252: Ski Lifts, Tows, or Runs.

MISCELLANEOUS LODGING ACTIVITIES

Answers to questions about other activities that may take place at a hotel or motel but that are not listed and are not a necessary part of a lodging operation are in General Liability Rule 26, Classifications–Scope of Application. It provides guidance by stating that certain operations that appear to require more than one classification do not because certain activities are included within the scope of a classification, and nothing else is required. Some examples are advertising signs, elevators, escalators, electronic games, parking areas, swimming pools, and vending machines.

This rule also lists several excluded operations that must be separately classified and rated. Examples are amusement centers, amusement devices, horses and mules, and commercially operated swimming pools.