What Insurance Do Hotels and Motels Need?
Hotels and motels need to be financially protected from liability risks. A guest could get injured or their property could be stolen. Do you have business liability insurance or enough business liability insurance?
Your commercial insurance policy needs to be tailored for your hotel or motel to protect your investment.
Why do hotel and motel operators need business liability insurance?
Liability insurance for hotel and motel owners provides financial protection should you or your employees be named in a lawsuit.
Your hotel or motel needs its business insurance customized for the specific risks in the accommodation sector.
Did you know? Western has a partnership the Hospitality Insurance Program (HIP), which works with Canadian hospitality associations to provide business insurance and employee benefits solutions that are tailored to the unique needs of hotels and motels.
Liability insurance is an essential part of your hotel and motel insurance package. Here are the liability coverages that you need to help protect your business from lawsuits.
Commercial general liability (CGL) insurance
The most important type of insurance you need for your hotel or motel is commercial general liability. If you were sued, commercial general liability insurance would cover the legal costs to defend the claim against your business in court, as well as costs to cover damages to compensate third parties (guest, supplier, member of the public).
What kind of risks does commercial general liability cover?
Commercial general liability covers risks such as:
- Injury to another person who is not your employee
- Damage to someone’s property, damage to rented property.
- Medical bills if someone is injured
- Legal and settlement costs of liability lawsuits filed against you.
- Helps over the costs of liability lawsuits related to slander and libel
Cyber liability insurance
If you keep financial information belonging to your guests, your system could be hacked by cyberthieves. Cyber liability insurance will help protect your hotel or motel in the event of a cyber-attack.
Depending on the size of the data breach and the information that was taken, the customers who are affected can hold you liable and sue you for damages.
Liquor liability insurance
If your small hotel or motel offers alcoholic beverages with room service, in a mini fridge, at a bar, or if your restaurant serves drinks, you will need this type of coverage. Liquor liability insurance protects you against any property damage or injuries caused by an intoxicated guest or customer.
Commercial umbrella insurance
You may want to consider commercial umbrella insurance for your hospitality insurance package. Commercial umbrella insurance, also known as just umbrella insurance, addresses liability coverage gaps. It’s used when the primary liability coverage, for example on your commercial general liability insurance, has reached its coverage limit.
The protection that umbrella insurance provides applies only to expenses related to liability such as legal fees, court fees, and legal settlements.
What other types of insurance are needed for hotels and motels?
Equipment breakdown insurance
If there’s a power outage, air conditioning or heating failure, or appliance breakdown, it can lead to property damage and possible business interruption for your motel or hotel.
Equipment breakdown insurance provides coverage for property damage from the sudden and accidental breakdown of insured equipment not automatically covered by a standard commercial property policy. It covers property damage, business interruption when it’s included in your policy, and spoiled inventory or contents when specified kinds of mechanical, electrical and pressure equipment are damaged, including power surges.
You can insure nearly everything that is mechanical, electrical, electronic, or under pressure due to breakdown. This includes boilers, air conditioning and refrigeration units, electrical panels, computers and security, and telephone systems.
Commercial crime insurance
Employees, guests, and vendors all have the opportunity to steal from your hotel or motel. If one of your guests is a victim of theft, you could be held responsible for the loss.
Crime insurance helps protect you against certain types of losses that are not covered by a standard commercial property policy, such as employee theft, credit, debit or automated teller, counterfeit money, or loss of money at your hotel.
Commercial property insurance
Commercial property insurance can provide financial coverage for physical loss, such as a fire, or damage to your business property and its contents. It also protects the building and provides coverage for your equipment, inventory, furniture, computers, and other electronics. You might also hear it called business property insurance.
Business interruption insurance
This type of insurance supports you when your hotel or motel business can’t operate due to a covered loss.
There are a number of losses that could force your business. Some examples are:
- Damage to your equipment from fire or vandalism
- A major reduction in revenue due to a client/supplier facing losses of their own
- A disruption in your supply chain
Business interruption insurance can help with these expenses:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your business
Commercial auto insurance
Your personal car insurance doesn’t cover your business vehicle(s).
Commercial auto insurance will cover damage to your business vehicle if you or one of your employees gets injured in an accident and your liability to others. It also provides replacement car coverage if you need to rent a temporary car for your hotel/motel business after a covered accident.
How much does a hospitality insurance package cost?
The following factors are usually considered when determining the cost of your commercial: Location(s), services provided, number of employees, years of experience, annual revenue, and any past claims.
FAQs
Is hotel/motel insurance affordable?
Review your hotel/motel insurance policy yearly. Do you have the right insurance coverages at the right value for you? Ask about discounts for your motel/hotel insurance. Security surveillance cameras, burglar alarms, automated fire detection and water sprinkling systems may qualify you for a discount. If you bundle your commercial auto with your business insurance you may qualify for discounts.
Where can I get a free online business insurance quote?
Western Financial Group can give you a free online business insurance quote for your business within minutes.
What’s hospitality insurance?
It’s generally a package of insurance coverages for hotels and motels. It can include commercial general liability insurance, commercial property insurance, equipment breakdown insurance, cyber liability insurance, crime insurance, and business interruption insurance, among others.
I own more than one motel. Can they all be on the same business insurance policy?
If you own more than one motel/hotel, they can be included in one policy with the same insurer. You may get a discount for insuring more than one property with the same insurance provider.
How much business liability coverage is needed for a hotel?
The coverage amount needed will depend on what you are trying to protect and its value. It’s important to discuss with your business insurance the limits you believe will financially protect your for each kind of liability insurance that you chose.
What are common motel/hotel insurance claims?
Common claims include:
- Slips, falls, and trips
- Broken furniture
- Water damage
- Burns
- Bed bugs
