Hotel & Hospitality
Hotel & Hospitality Insurance
Hotel-motel insurance is a very specific type of business insurance policy that has been tailored to meet to the unique coverage needs of hotel and motel owners. There are many different coverage options available, allowing you to build a policy that is sufficient to meet your unique requirements.
What Types of Insurance Do Hotel Owners Need?
As the owner of a hotel or motel, you will need to obtain the following types of insurance:
Unemployment insurance: This coverage is required by law and is included as part of your state taxes. Once you establish and register your hotel or motel with your state’s workforce agency and begin paying taxes, your business will be covered.
Disability insurance: This coverage is required by law only if your hotel is located in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico. Otherwise, it is optional.
Medical insurance: If your hotel or motel employs more than 50 people full-time, the Affordable Healthcare Act requires you to offer them employer-subsidized health insurance.
Business insurance: This coverage is necessary to protect your business from extreme financial losses resulting from disasters, accidents and other expensive problems you may face in the course of running your hotel.
Hotel Business Insurance Provides Liability Coverage
There are many different liability risks faced by the owners and managers of hotels and other hospitality businesses. Having sufficient hotel liability insurance is vital to keeping your business financially healthy.
Employment practices liability: This insurance protects you from losses associated with lawsuits brought against your business by disgruntled employees.
In each case, your hotel liability insurance coverage includes compensation for any associated court costs and legal fees.
Hotel Business Insurance Covers Your Property and Assets
Opening a hotel requires a substantial financial investment. You will want to be sure to have protection for financial losses associated with property loss and loss of income. Some coverage options that can afford you this protection include:
General property coverage: Your hotel is filled furnishings, electronics, décor, carpeting and amenities. If property is lost or damaged due to theft, vandalism, fire, severe weather or other catastrophic event, this coverage will provide you with compensation for your losses. You will want to have sufficient coverage for the many things in your hotel.
Equipment breakdown coverage: An equipment breakdown can have a serious effect on your bottom line. If you have an equipment failure in your kitchen, it can affect your restaurant and room service revenue. A failure of your computer system can cause lost reservations and angry customers. Equipment breakdown coverage will provide funds to repair faulty equipment and to make up for lost income that resulted from the failure.
Business interruption coverage: If a covered event forces you to temporarily close your hotel for repairs, or impassable roads keep your guests away, you can rely on business interruption coverage to provide you with sufficient income to allow you pay your monthly expenses and employee salaries. This coverage is typically limited to one year.
Crime coverage: You can protect your hotel from losses stemming from guest and employee theft. If an employee engages in illegal behavior while working at your hotel, this insurance can provide compensation for your losses.
Food spoilage coverage: If a power failure or equipment breakdown causes food in your hotel’s restaurant to go bad, you could face a large financial loss. Food spoilage coverage will compensate you for lost or spoiled food.
Utility interruption coverage: A utility outage can have serious consequences. If there is no running water, your hotel will need to close its restaurant and may need to move guests to a new location if the problem is not resolved quickly. Utility interruption coverage provides compensation for any losses accrued due to a sustained utility outage.
Other Coverage Options Are Available
Many hotel and motel insurance companies will offer several other coverage options from which you can choose. Some of the more popular include:
Umbrella coverage: You may want to consider purchasing an umbrella insurance policy to meet any excess liability charges you may be faced with. This additional coverage can save your business from bankruptcy following a catastrophic event.
Hotel guest relocation services: If a problem such as a fire or a utility outage forces you to relocate your guests, this insurance coverage will provide you with compensation for the costs associated with moving guests, as well as the losses incurred by your hotel as a result.
Event cancellation insurance: Many hotels rely on the income generated by renting out halls and banquet rooms for events. If an event must be cancelled due to damage to your hotel, equipment failure or power outages, this insurance will cover the associated costs, including lost revenue that would have been generated.