Hotel Motel Insurance – Cost and Coverage

Whenever you budget the expenses of your business, hotel motel insurance must be near the top of the list because you can’t always know exactly what is going to happen in the future.

With the protection provided by insurance against accidents and all the other kinds of insurance we will tell you about, you can protect your business and yourself in case something unwanted happens.

Like any business owner, for your hotel motel enterprise, you must consider how much financial liability you are taking on.

If your hotel motel business runs without proper insurance, you are taking a tremendous chance not just of losing some money but of a final wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the consequences of their actions. 

In this article, we are giving very general guidelines for growing businesses to highlight what the main kinds of insurance that you need are, and where available, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your hotel motel business?

What this means, for any hotel motel business owner, is that if some company claims that your actions caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your hotel motel business is not protected by laws in the same way as states are, where legislation can place a “cap” on the maximum level of liability.

In some states, like Texas, there are specific monetary levels that limit the amount a court can award in any case against the state.

In a court case, it’s purely the duty of the jury to award whatever amount they deem appropriate, even sometimes giving a claimant more than they have sued for.

When you are running your hotel motel operations, you can’t escape responsibility for the outcomes of your actions.

Even more importantly, unless you have spent up-front the money necessary to have your business running as a limited liability company, all of that liability belongs to you as an individual.

What does hotel motel insurance protect you from?

For your hotel motel business, the most important sorts of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

Also there are some mandatory kinds of insurance that various states require.

In the next few paragraphs, we will outline the most important points any hotel motel business owner should remember when negotiating the insurance needed.

The main types of insurance for your hotel motel businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any hotel motel business is dealing directly with members of the public, and that means you usually have the danger that some accident can happen to them personally or else something of theirs can be damaged.

In such a case, they can demand compensation.

General liability insurance policy for your hotel motel business covers you against claims coming from injury to customers or damage to their property.

It protects your hotel motel business from the claims themselves and also to any resulting court costs and legal fees of the lawsuits.

In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The usual level of general liability insurance for your hotel motel business would be with a upper limit of $1 million for a single claim and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your hotel motel insurance operations.

Professional liability insurance for your hotel motel business

In the event where a client alleges some negligence, errors, or omissions in how you conducted your hotel motel business for them, you can quickly have to fight a monetary claim.

Even if the matter against you is judged in your favor, the cost of defense can be large, and the impact on your reputation can be damaging.

Almost all small hotel motel business should have enough professional liability insurance to cover a once-off claim of $25,000, with annual cover of $50,000.

See the table in the cost of hotel motel insurance section below for average prices of professional liability insurance for your hotel motel operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that clients may claim that the results didn’t meet your description of function, or that your guidance was basically incorrect.

You need to know the particular laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held responsible for damages caused by products claimed to be defective.

To cover yourself against any possible lawsuit, you need Product liability insurance for hotel motel

Only you can determine exactly how much insurance you need.

Best advice is to talk to experienced insurance agents, brokers or company representatives for support.

Commercial insurance

Commercial vehicle insurance for your hotel motel business

Take care! – almost all policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the vehicle is being used for business purposes.

The proper way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial truck policies guarantee the value of any vehicle in case of accident, malicious damage, fire, or theft.

In addition, in case of any accident, the truck itself, the content and any legal bills, medical expenses, and property damage is guaranteed if your van is involved in a crash.

Most states, other than Virginia and New Hampshire, mandate this type of insurance.

The wanted value of the insurance is worked-out for the depreciated value of the vehicle, and your requested level of cover of contents. 

Tools and Equipment insurance

Since your hotel motel business needs specialized and costly equipment, you can appreciate how much it can cost to replace it in case of any damage, loss, or theft.

The equipment may be subject to malicious damage, deliberate fire, theft, other such unexpected acts.

Also, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can destroy your whole business in one stroke.

Unless you can afford to immediately replace such specialized gear quickly out of your own pocket, you need full-level equipment insurance so that you can immediately buy any equipment needed to keep your hotel motel business running.

It is difficult to advise how much equipment insurance you need – it’s basically dependent on how much you have invested in your hotel motel business’ equipment.

Commercial Property insurance

Any hotel motel business that owns or rents space in a building must have a commercial property insurance policy.

If you own the property, you may already have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Any physical building location should carry insurance coverage for the value of the premises and contents against unexpected occurrences like fire and storms, and against deliberate damages like theft and vandalism.

If your hotel motel business deals in areas of high risk, like Florida or Georgia, extra coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Washington, where unlimited cold snaps can cause damage to outer coverings of hotel motel business premises, there is a need for more additional cover than in warmer climes.

Although the level of cover depends entirely on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of hotel motel insurance section below to give some indication of the average prices per million dollars of property insurance for your hotel motel business.

Temporary insurance by month, week or day for your hotel motel business

Is your hotel motel business working part-time or casually, or is the level of business seasonal?

Using short-term insurance makes excellent sense. Business insurance by the month, day, or week – temporary insurance for hotel motel – are special policies where you can cover a specific period when you want to be covered.

By only paying for that period of cover, you will save by having less premiums but still having the same risk cover.

The important feature of short-term insurance is that you buy the cover for a defined period – a designated date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover increased.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your hotel motel business

You have the chance to combine several of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP integrates commercial property and public liability insurance by amalgamating these coverages into one insurance policy, which can save you money.

BOP insurance will cover you if any claims of injury or property damage are made.

It is mostly the right choice for small and medium-sized hotel motel businesses, such as yours.

There are a few limits that will determine whether BOP is suitable for your own business.

BOPs will not cover your professional liability or commercial vehicle risks.

Also, the size of your business will dictate whether you are eligible to take out BOP cover.

The normal business that is eligible for a BOP policy must have no more than one hundred employees, and under five million dollars in annual turnover.

Plus, you must separately take out the mandated worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your hotel motel business employees

In almost all states, it is mandatory to have workers compensation insurance when your hotel motel business has one or more employees.

Workers compensation insurance covers the business against any costs that arise if a worker experiences an injury or becomes sick as a result of work.

The benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s requirements in this regard can leave you as the employer obliged to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only authorize coverage from the government-run monopoly state funds.

In these states, you may not get your workers compensation obligations from private insurance corporations.

Workers compensation charges are worked out based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must refer to the relevant authorities in your state.

Average costs of these types of insurance

Although every hotel motel insurance requirement is unique, there are enough examples of average quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.

Of course, you should always check with a broker what’s relevant for your business.

The list below is of annual premiums we have gathered for the main types of insurance your hotel motel businesses needs.

Cost of insurance for your hotel motel operations depends on many different factors.

We have reckoned these figures for small self-employed hotel motel businesses.

In larger states like California, premiums are generally about 20%-30% higher than national averages, but in smaller states like Oregon, they can be about 20%-30% less.

The location and size and type of your hotel motel business can have a big effect on the cost of different policies.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

As well you can let the internet do the work for you by enquiring about insurance companies near where your business is located.

Another reliable source of information is the local Better Business Bureau in your town.

FAQ

What is small business insurance for hotel motel operations?

This is an umbrella term used to describe common insurance policies designed to protect hotel motel business owners from risks like bodily injury, property damage, claims of negligence.

Does my hotel motel business have to have insurance?

Some of the kinds of insurance are not mandatory for you to open your business, but they can protect you from risks in your business operations.

Certain other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small hotel motel business insurance policy cover?

Liability insurance provides coverage against lawsuits or claims filed by a client for bodily injury, property damage, or negligence.

The precise cover will vary based on your own operations.

See the table in the costing section above for average prices of the most common policies for hotel motel insurance.

How much will hotel motel business insurance cost?

On top of the size of the business, several other factors, such as location and claims history, are used to determine your policy’s cost.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

You can search for more information insurance for hotel motel, in the search box below, and follow the relevant links.

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