Whether you own a five-star hotel, a boutique hotel, or a mom and pop motel; you need insurance to protect those risks your business could face. With these risks, comes a need to protect your business with the right coverage and all that comes with it.
What Types of Insurance Do Hotel Owners Need?
As a hotel or motel owner, you will be required to make sure you have the following types of insurance:
1. Unemployment insurance – This coverage is required by law and is included as part of your state taxes. When you establish and register your business with your state’s workforce agency and begin paying taxes, your business will be covered.
2. Disability Insurance – Depending on what state your hotel is located; this coverage may be required by law. If your not required to have this coverage, then it is optional.
3. Medical insurance – If your hotel or motel employs more than 50 people full-time, the Affordable Healthcare Act requires you to offer the employer-subsidized health insurance.
4. Business insurance – This coverage is essential in protecting your business from great financial losses after a natural disaster, accidents, and other costly problems that could occur while operating your hotel.
What is Hotel or Motel Business Insurance?
It is a specific type of business insurance policy, or business-owners policy also called “BOP.” This policy is tailored to meet coverage needs of your business. There are several different coverage options offered in providing you with the ability to build your policy coverage that is specific to your needs.
Hotel or Motel Business Insurance Liability Coverage
When it comes to liability insurance, there are several different liability risks one could face. It is important to make sure your business has adequate hotel/motel liability insurance in the event of a loss.
There are many different types of liability insurance coverage available for a hotel/motel, they are:
• General liability – This coverage protects your business from injuries or property damage from guests who stay on your property.
• Workers Compensation – Covers an employee while injured on the job. Your business is required to cover any related medical expense. Each state has its own workers compensation requirements, your hotel/motel business insurance can include this coverage in meeting your state’s laws.
• Business Auto liability – If your business provides limo, van, or shuttle service to your guests. Your hotel/motel needs this liability insurance to protect you in case of an accident.
• Foodborne illness liability – Most hotels may provide a restaurant on site and offer room service. What if, the food is served contaminated with E. coli, salmonella or any other foodborne illness, and your guest becomes sick. This coverage protects you from any liability cost.
• Liquor liability – If your hotel includes a bar or provides alcoholic beverages via room service, then you need to have liquor liability insurance. This protects you should a guest become intoxicated due to your negligence in serving of alcohol, and leaves the hotel causing an accident which involves property damage or bodily injury to themselves or someone else.
• Premises pollution liability – When your hotel is contaminated with mold or other airborne pollutants causing your guest to get sick, you could face liability charges. This coverage provides insurance that result in medical bills, punitive fees, and cleanup costs.
• Cyber liability – In the event your computer or data management system is breached, cyber criminals now have access to your guest’s personal information, including names, addresses, and credit card numbers. If this occurs, you could potentially be responsible for providing all affected guest with credit protection services and could face harsh penalties. This type of insurance is designed to cover your businesses that use technology services or products. It mitigates risk exposure by covering a variety of losses that result from a security breach or a cybercrime.
• Employment practice liability – Provides insurance protection from losses related to lawsuits that are brought against your business by employees claiming harassment or discrimination.
Hotel or Motel Property and Assets Insurance Covers
Whether your opening a hotel or you currently own a hotel, it is a huge financial investment. That is why it is important to make sure you have the protection for financial losses related with property and income loss. Some coverage options include:
• General property coverage – This includes furniture, electronics, décor, carpeting, and amenities. In the event your property suffers a loss due to fire, theft, vandalism; this coverage will reimburse you for your losses.
• Equipment breakdown coverage – Equipment breakdown can have a severe impact on your bottom line. What if your heat goes out due to equipment failure or your computer system goes on the fritz causing lost reservations and angry customers. This could lead to a substantial revenue loss. Equipment breakdown coverage provides fund to repair damage caused by the equipment failure and make up for lost income due to the covered failure.
• Business interruption coverage – Due to a loss that forces you to temporarily close your hotel for repairs. Business interruption coverage provides you with necessary income to help you pay your monthly expenses and employee salaries. This coverage is typically limited to one year.
• Crime coverage – Protects your hotel from losses stemming from a guest or employee theft. If an employee engages in some shady illegal behavior while working at your hotel, this coverage will provide reimbursement for your losses.
• Food spoilage coverage – In case there is a power failure or equipment breakdown which results in your food in your hotel’s restaurant to go bad, you could face a significant financial loss. Food spoilage coverage will reimburse you for lost or spoiled food.
• Utility interruption coverage – A utility outage could have significant consequences. If there was no running water, your hotel would need to close the restaurant, and possibly need to move guests to a new location. Utility interruption coverage would provide reimbursement for any losses you may have accrued due to a sustained utility outage.
Other coverage options that could help you with other exposures, include:
• Umbrella coverage – provides excess liability on top of your existing liability insurance coverage.
• Hotel guest relocation service – provides reimbursement in case you need to relocate your guests and any losses incurred by your hotel as a result.
• Event cancellation insurance – If an event needs to be cancelled due to a covered loss, equipment failure, or power outage, this insurance will cover any related costs, including lost revenue.