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How To Get Your Small Lodging Business Insured


Situated near a tourist destination? You can capitalize on such privilege by purchasing a property and opening a sure hit business – accommodation. Hostels, motels, small inns, bed and breakfasts, and private guesthouses are all attractive alternatives to weary travelers who’d want to have a fabulous vacation without splurging on big hotels. During the peak seasons, you can see room reservations selling like pancakes. However, it is also during these seasons when lodging businesses need insurance.

What could go wrong? A lot.

While receiving guests translate to higher profits, they may also mean higher risks to face and prepare for. For instance, your facility, as well as other business assets, may be destroyed by fire. Your employees could be injured at work. Your guests may sustain bodily injuries in your premises and sue you for the damages. No one is held accountable for these catastrophes arising from your business operations but you. Buying insurance is one way to attain peace of mind that when these events arise, you won’t have to bear all the expenses and you’re protected against possible lawsuits.


Insurance is a waste of money – until you actually need it. Therefore, it shouldn’t come as an afterthought. So if you’re planning to start a small lodging business, here are four insurance policies you would likely need.

1. Safeguard your business property

Commercial Property Insurance

Let’s start with your bread and butter – your property. It’s not impossible for hazards like fire, theft, and natural disasters to damage your properties. A commercial property insurance works to safeguard your business against losses caused by the damages to buildings and the assets in it.

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Property insurance is often obtained as a part of a package policy. Some insurers even offer policies specifically designed for small lodging establishments like inns, motels, and B&Bs. However, there are cases when a standard property insurance is limited and you still have to purchase specialized coverages for your business needs:

  • Is your business location prone to natural disasters like floods, mudflow, earthquakes, and volcanic eruptions? Specialized coverages including flood insurance and earthquake coverage can be purchased separately.
  • Do you own unique properties like expensive artwork collections and antique furniture? If you do, then consider purchasing a separate policy such as fine arts coverage.
  • Do you want your commercial property to be insured based on its replacement cost or its actual cash value (ACV)? Replacement cost coverages and ACVs may be more expensive but they provide better protection and recovery from a large loss.

The amount of coverage should be based on the worst cases you could potentially face. Assess your building and your business assets (furniture, appliances, antique decors), and determine the possible mishaps that could destruct them. Ask yourself, how much would you spend for reconstructing the building and for replacing damaged furnishings if all these were destroyed.

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2. Protect your business against liability claims

General Liability Insurance

It seems like all is well in the guesthouse until a scream is heard from the second floor. It appears that guest lodging in Room #10 slipped in the shower and sustained a serious head trauma. Meanwhile, two other guests approach the front desk, claiming to have been food poisoned after consuming your food. Being faced with these claims, which translate to lawsuits and expensive medical and legal costs, is not uncommon for motels, inns, and other similar business.

General Liability (GL) insurance protects a business against claims of property damage, theft, bodily injury, and advertising injury sustained by your guests in your business premises and during your operations. Getting a GL means you won’t have to bear the full costs when these unpleasant events arise.

Again, the amount of coverage depends on your line of business and risks. For instance, if your lodging business serves alcoholic beverages and/or operates a full bar, then you need a liquor liability insurance. The policy covers your business against claims when an intoxicated patron injures himself or someone else, and damages other patrons’ properties.

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3. Insure the people who work for you

Workers’ Compensation Insurance

Each employee is considered as a business asset and thus, should be insured with a workers’ compensation policy. The policy covers medical and rehabilitation costs, as well as lost wages, in the event your worker/s get injured on the job.

The workers’ compensation policy works both ways for the employee and for you, as an employer. Firstly, it compensates for the medical and financial benefits of the injured worker. Secondly, it protects you against cases filed against your business in the event the employee dies or get permanently disabled.

4. Insure your business vehicles

Commercial Auto Insurance

Vehicles utilized for business, like shuttle services and delivery trucks, should be insured with commercial auto insurance. The policy is quite similar to personal auto insurance you might already have but it has inclusions that are conducive to your business. It includes property coverage for your business vehicle, liability coverage for the injuries and property damages to third parties, and coverage for the injuries of your driver and other passengers in your vehicle.

Author Bio: Ina Salva Cruz is one of the enthusiastic writers for Insurance Adviser, one of the largest and most credible General Insurance businesses in Australia and New Zealand, providing high-quality risk management advice for business owners.

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