Hotel Insurance

Hotel Business Insurance

Accommodation and hotel insurance protect hospitality businesses from the potential risks if they are sued or if their business suffers damage or loss resulting from an unforeseen accident.

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Zensurance - Hotel Business Owner

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Hotel Operator

Insurance for hotel owners

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.

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.

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.

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.

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
  • Hostels
  • Hotel operators
  • Inns
  • Lodges
  • Motel operators
  • Resorts
  • Restaurants

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Common claims scenarios

pool liability

Problem: Your motel features an outdoor, in-ground swimming pool for guests to enjoy. One of your guests slips on the wet sidewalk running alongside the pool, falls, and fractures a wrist. They decide to sue you for third-party bodily injury.

Outcome: Your commercial general liability insurance may pay for the injured guest’s medical expenses, your legal defence fees, and any subsequent settlement ordered by the court.

smoking in hotel room

Problem: A fire ignites in one of your guest rooms that causes significant damage inside it and the adjacent rooms and all the contents and furnishings in them.

Outcome: Your commercial property insurance may pay to repair the fire and smoke damage to the affected guest rooms and replace the furnishings and contents.

fake security link virus

Problem: One of your employees inadvertently clicks on a link in an email that results in malware infiltrating your hotel’s reservation system software, compromising your guests’ privacy and financial data, and triggering a business interruption as the system goes down.

Outcome: Your cyber liability insurance may pay to repair and restore your reservation system software, provide your affected guests with credit monitoring services, and reimburse you for losses you suffered from the system outage.

Frequently asked questions

How can I reduce the cost of a hotel insurance premium?

Taking proactive steps and preventative measures to mitigate your hotel’s risks is the best way to keep your annual insurance bill low. It’s important to note that an insurance contract is not a maintenance contract. Therefore, it’s incumbent upon you to ensure necessary repairs and maintenance to the property are conducted regularly. Furthermore, installing 24/7 monitored security surveillance cameras and burglar alarms, automated fire detection and water sprinkling systems, and having established safety programs and trained employees can help keep your annual premium as low as possible.

Can I include both properties on one insurance policy if I own two or more motels or hotels in different locations?

Yes. If you own multiple motels or hotel properties, they can be included in one policy with the same insurer. Doing so may also net you a modest discount for insuring more than one property with the same insurance company.

My hotel does not have a bar, but each room has a small refrigerator that contains alcohol guests may purchase. Is it necessary to include liquor liability insurance in my overall policy?

Yes. Any hospitality business that serves its guests or customers alcohol should buy liquor liability insurance. Whether you serve alcohol in a bar or eatery, or in guest rooms, you could be held liable for injuries or damages caused by a guest if intoxication is deemed a contributing factor.

Is Cyber Liability Insurance necessary for a hotel?

Cyber liability may not necessarily apply to all hotels, but many hotels and lodging establishments do utilize electronic data that makes them susceptible to cyber attacks. For example, a hotel may have a website where clients make reservations online. The website may also accept electronic payments from customers, and customers’ financial and personal data may be stored in the hotel’s systems. A cybersecurity breach for such an establishment could lead to severe problems if the establishment is not protected by Cyber Liability Insurance.

Is liquor liability an important coverage for my hotel?

If you serve alcohol, you should consider protecting your business with liquor liability coverage. According to the Insurance Bureau of Canada, if you serve alcohol you could be held liable for injuries or damages to third parties if alcohol is deemed as a contributing factor in the incidents. Any business that serves alcohol is also responsible for ensuring that customers are not served past the point of intoxication, which is extremely difficult to keep track of, especially in a busy environment.

Do hotels require Property Insurance in addition to General Liability Insurance?

Yes, hotels may require Property Insurance. General liability insurance covers injuries and property damage to third parties. General liability will protect you in incidents such as slips and falls and damage to guests’ property by your employees, but damage to your own property is not covered. Hotels have a high residential property value and own many expensive contents. If you wish to protect your assets, you may consider adding Commercial Property Insurance to your insurance policy.

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