What Types Of Insurance Do Hotels & Motels Need?

Operating a hotel, inn, motel, or any kind of lodging establishment makes you label to a lot of risks. You could have a fire due to negligence, or be sued by a guest that slip on your premises.

The property that guests bring with could be stolen or damaged. In order to protect yourself against all kinds of claims and suits, it is essential that you get the proper insurance coverage for your kind of establishment.

Property Insurance

Commercial property first needs to be insured by a general insurance plan. This would protect the business from losses caused by any damage to your buildings and all that they contain. Property insurance comes as part of most package policies, but you may also be able to get one specially designed for your organization.

Some insurers could give you unique packages for motels, bed and breakfasts, etc. These would be written using forms for business owners and include several kinds of coverages that lodging businesses need.

Limits

You should think about the worst cases possible before settling upon a limit for a commercial property policy. Calculate the cost of reconstructing the whole building, replacing the furnishings, and everything else on the premises. Include any antiques or valuable decorations as well as heavy appliances.

Replacement Cost or ACV

You can choose to insure your commercial property based on its ACV (Actual Cost Value) or the replacement cost. The latter would be more expensive but would give you the most protection. Without replacement cost coverage, you may have to pay for reconstruction labor and other related costs yourself.

Along with this, you should also get coverage for building ordinances. If your building was destroyed by a fire, you may have to rebuild it in a certain manner in order to comply with building codes. Your insurance should cover the additional costs instead of you or your organization.

Artwork and Collectibles

Inns and hotels could be historic places, with expensive sculptures, works of art, rugs and the like. Most commercial policies would only cover all these to a limited extent. Even if they do cover the artwork, collectibles, and China, they would do so on an ACV basis. In order to get the replacement value, you’d have to get a fine arts coverage separately.

Business Income and Extra Expense

Lodging establishments earn through the rent paid by guests. If the building is damaged in any way, the business itself could come to a halt. You would have to incur those losses along with the rebuilding costs in such a situation.

Your standard policy would not cover the lost income, so you’d have to get something called a business income or business interruption coverage.

There’s also extra expense insurance to consider. This covers the expenses for avoiding or minimizing a business shutdown after any loss of damage. These may be covered in certain package policies that are specially designed for lodging organizations.

Catastrophic Risks

Your standard policy would not cover damage by natural disasters like floods, volcanic eruptions, landslides, or earthquakes. If you’re in a risky area with regards to such events, get flood or earthquake insurance as soon as possible.

Liability Insurance

As mentioned before, you need to protect yourself against liability claims for bodily injuries, food poisoning, damage of property, or advertising injury. If you don’t you may be hit by a huge claim at any moment. For instance:

?   Someone could drown in your swimming pool

?   Someone slips in the tub and sustains broken bones or concussion

?   A party held at your hotel gets food poisoning

With a general liability policy, all of the above would be covered. It would also include product liability. Any claims by your guests or any third party would be covered, whether it’s damage or injury through food or any of your products and services.

Liquor Liability

If you serve alcoholic beverages, be aware that your standard policy would exclude liquor liability. You would have to purchase liquor liability separately. This may be added to your general policy or your package with a premium added on.

Innkeeper's Liability

For most of the states, the law would limit an innkeeper’s responsibility for any theft or damage on his property. They may be responsible for all the loss or just some part of it. There would be a specific limit for coverage stated on the policy.

Commercial Auto Insurance

If you have vehicles used in your business, a commercial auto policy is necessary. A personal policy won’t cover a business auto. even if it does have auto liability limits, they probably wouldn’t extend to business use.

Workers' Compensation Insurance

This sort of insurance would get workers the benefits they're entitled to under the law. You’d get this sort of coverage from several insurers. Ask a professional broker or agent for assistance in purchasing your insurance.

Other Coverages

You should consider two more liability coverages—commercial umbrella and cyber liability. The umbrella policy would cover both the general and auto liability coverages. It would give you limits over what both of these could provide you with. Plus, it would cover claims that the primary policies may not cover. This umbrella would come in handy if there’s a huge loss incurred, such as drowning.

You would also probably user and store a large amount of data on your computers. Lodging establishments typically have customer records, websites, credit card information, and other sensitive data. You should insure all this under a cyber liability policy. This would protect you in the case of a data leak or hacking incident. Having the right hotel / motel insurance is important.