The Canadian hospitality industry is a large, diverse segment. There are more than 8,000 hotels, motels, and resorts in Canada, employing more than 300,000 people and generating approximately $21.9 billion in spending on overnight stays annually.
An insurance policy exclusively tailored for hotel operators, motel owners, and resorts is critical for protecting your assets and property from a broad range of risks, including third-party liability.
What is hotel insurance?
Hotel insurance is designed to protect hospitality businesses, including hotel operators, from the risks they face, such as third-party bodily injury or property damage lawsuits and other exposures.
Hoteliers are exposed to multiple risks related to lodging guests and the amenities their properties may offer, including restaurants, bars, swimming pools, and exercise facilities. A comprehensive hotel insurance policy can protect you and provide financial support for many incidents or accidents that can threaten your business’s survival.
What does it cover?
A comprehensive hotel insurance policy may include the following types of coverages:
- Commercial General Liability (CGL) Insurance: CGL covers you for third-party claims alleging bodily injury or property damage that may result from an unexpected accident or negligence caused by your business’s activities. For example, if one of your guests slips, falls, and is injured while crossing a freshly mopped floor (CGL is frequently called ‘slip-and-fall’ insurance). It provides cover for legal costs or damages related to third-party bodily injuries, product liability, repairing or replacing property that you rent, and allegations of defamation, libel, slander, and false advertising.
If your establishment has a bar or a restaurant that serves alcohol on the property, you should include liquor liability insurance in your overall policy. Liquor liability coverage protects you from third-party bodily injury or property damage claims resulting from the actions of an intoxicated individual who consumed alcohol on your premises. If one of your hotel guests is injured, hurts someone else, or damages property after becoming intoxicated at your onsite restaurant or bar, you could be liable for damages.
- Commercial Property Insurance: Commercial property insurance protects your hotel’s physical structure, property, and contents. Also known as business contents insurance, commercial property coverage provides financial support if your property, fixtures, furnishings, and inventory suffer damage or loss resulting from fire, flood, extreme weather, theft, or vandalism. Commercial property coverage typically includes business interruption insurance. It provides coverage for net income lost following an insured event, and overhead costs such as rent and employee payroll to keep your business operating.
- Equipment Breakdown Insurance: For any hotel, motel, or resort, having equipment breakdown coverage as part of your policy is a wise move. Also referred to as boiler and machinery coverage, equipment breakdown insurance provides financial support for your business’s equipment and machinery malfunctioning due to an electrical or mechanical issue. For instance, it may pay to repair or replace kitchen appliances, air conditioners, boiler and pressure vessels, and computers and office equipment.
- Cyber Liability Insurance: Regardless of size or location, no modern business operating online or conducting financial transactions electronically is immune to cybercrime or the risk of an accidental data breach. Cyber liability protection provides you with cover if your business suffers a cyber-attack or a hacker infiltrates your network and confidential data is stolen. It provides you with financial support for legal costs, repairing and restoring your software systems, and coverage for losses sustained due to a system outage from a cyber-attack.
- Commercial Crime Insurance: You aim to hire honest, trustworthy employees, but including commercial crime insurance in your policy is sensible. It protects hotel owners from internal theft, fraud, forgery, and other acts of employee dishonesty. However, it does not cover losses because of burglary, robbery, or a break-in. Commercial property coverage will safeguard you from those potential threats.
Who needs it?
Any business owner in the hospitality industry who provides short-term lodgings to the public needs a hotel insurance policy to protect themselves, such as:
- Airbnb hosts
- Bed and breakfast (B&B) owners
- Guest houses
- Hotel operators
- Motel operators
How much does it cost?
The annual cost of a hotel insurance policy depends on many factors an insurance company weighs when deciding how much to charge. These factors include:
- Your years of experience as a hotelier and business owner
- Where your hotel is located and how many guest rooms it has
- What its maximum occupancy is
- The types of services and amenities you provide your guests
- If you have a restaurant, café, or bar on the premises and if you serve alcohol
- The total number of employees you have
- Your annual and projected revenue
- Your insurance claims history
What the cost of your policy will be is unique to your business and the potential liabilities you face. However, commercial general liability insurance may cost approximately $450 per year for coverage of up to $2 million.
Common claims scenarios
Frequently asked questions