Running a hospitality business has its own unique risks.

One of the big differences between insuring a hospitality business and other businesses is the need for innkeepers’ legal liability insurance. You have an obligation under the law to keep your guests’ belongings secure, safe, and in some cases, you can be held responsible for loss or damage. What’s more, because the legal requirements can vary from state to state, your insurance needs can be complex.

Other unique risks for the hospitality industry.

If your hospitality business also includes a restaurant or bar, a liquor liability policy is a must-have. Offering valet services, either for the restaurant or guests lodging with you, creates another risk factor that requires attention. Airport and local shuttles are also popular amenities, but they also carry their own specialized coverage needs.

How can hospitality insurance protect you?

Use the yellow hot spots and explore how hospitality insurance can help protect against common risks.
Hospitality

Building / Property Insurance

Risk Factor

Is your building subject to wind, rain, hailstorms, hurricanes, blizzards, or other weather events? These situations can cause significant damage to the building or roof, not to mention the dangers that lurk within such as a burst pipe or a kitchen fire.

Solution

Building coverage protects the permanent structure from most weather perils, burst pipes, a fire, and other losses.

Innkeepers Legal Liability

Risk Factor

You are required by law to keep your guests’ valuable personal items secure and safe, and you can be held responsible for loss or damage unless caused by an act of nature or the actions of the guest.

Solution

An innkeepers legal liability policy can protect against losses to your guests’ personal items when they are being stored in your hotel. Requirements vary by state, including maximum liability per guest, the types of items that are covered, where the item was stored, and the value of the item.

General Liability

Risk Factor

Water on the floor, slippery entry in the winter, broken glass/hazardous debris, etc. These are all accidents waiting to happen that make your business susceptible. Claims may arise due to bodily injury, property damage, personal injury, and more.

Solution

General liability insurance is an absolute necessity for any business. It provides broad coverage when you are deemed responsible and liable, and will also pay to defend any covered lawsuit or action regardless of its merit.

Liquor Liability

Risk Factor

Any establishment that sells, serves, or assists in the purchase or use of liquor is open to a liability claim as a consequence of someone getting inebriated to the extent that injuries or property damage result.

Solution

If you are in the business of selling or serving alcohol, it is critical that you protect your business from potential financial losses by being covered by a liquor liability insurance policy. Having the right policy in place could help cover your legal costs, court fees, and any civil or criminal damages stemming from an incident involving liquor.

Valet Parking

Risk Factor

Providing a valet service is convenient for your guests, but damaging a vehicle, property, or causing injury is a very real risk associated with it.

Solution

Obtain a general liability policy to protect your business from lawsuits by a third party. Be certain that a garagekeepers legal liability policy is in effect with adequate limits to cover any physical damage to your guest's vehicle or other vehicles on site. If you are using an independent valet service, obtain a certificate of insurance to verify they have the proper coverage with adequate limits. Also make sure that your business is named as an additional insured under their policy.

Cyber Insurance

Risk Factor

Hotels rely on technology to run almost every facet of their business and store sensitive information such as credit cards, passwords, and guests’ personal data. You are at risk if this information is lost, stolen, or compromised. You may be legally obligated to alert those impacted by the breach and possibly pay fines, restitution, and defense costs.

Solution

Experiencing a data breach is often not a question of if, but when. Securing a cyber liability policy can offer coverage for expenses associated with compliance regarding data breach notification laws, securing legal counsel to advise on incident response, credit monitoring service, and paying for regulatory defense, as well as penalties arising from privacy law violations.

Workers’ Compensation

Risk Factor

Most states require an employer to provide coverage for any injuries their employees experience while on the job, as well as any job-related illnesses.

Solution

Maintain workers’ compensation insurance to provide benefits to eligible employees, otherwise, you can be penalized for every day that coverage is not maintained, as well as for any benefits an employee would have been eligible for in the event of a job-related injury or sickness.

EPLI

Risk Factor

On average, it’s estimated that three out of five businesses will be sued by their employees. Hotels, just like any other business, are vulnerable from the pre-hire process through to a possible reduction in workforce. Claims can stem from just about anything, such as someone taking a “joke” the wrong way and being offended.

Solution

Coverage to protect you against this risk normally comes as a standalone policy. The right coverage is critical to your risk management process as it protects against discrimination, wrongful termination, sexual harassment, and other employment-related allegations. Typically, the policy will cover your business as well as your directors and officers. Third party coverage is an added option, usually accomplished via a policy endorsement, and addresses claims made by customers or vendors against you from acts committed by employees.

Business or Commercial Auto

Risk Factor

When you own or operate a vehicle for your hotel, you expose your business to liability risks to other drivers, property owners, and your own guests while being driven.

Solution

A business auto insurance policy should be maintained if the vehicles are owned by the company. If employees are using their own vehicles at any time as part of their job duties, then hired and non-owned auto liability coverage should be maintained. Both will defend you if you are named in a lawsuit as a result of an employee getting into an accident while working for you.

Business Income

Risk Factor

What would you do if a fire impacted your operations? Or what if a pipe leak caused an extended downtime of a significant block of rooms? These and other events can destroy your ability to serve guests and bring in revenue, which can have a major long-term impact on the viability of your hotel.

Solution

Business income insurance compensates you for lost income if the business cannot operate as normal due to damage that is covered under your commercial property insurance policy, such as fire or water damage. Business interruption insurance covers the revenue you would have earned, based on your financial records, had the incident not occurred. The policy also covers operating expenses, like electricity, that continue even though business activities have come to a temporary halt.

Commercial Umbrella

Risk Factor

What happens when your business faces a large liability loss that exceeds the basic limit of your standard policy?

Solution

A commercial umbrella policy provides high limits of insurance, typically between $2,000,000 and $10,000,000. Coverage is extended over your general liability insurance, workers’ compensation, business auto, as well as directors and officers liability coverage. It provides a great safety net and helps ensure your business is well protected.

Protecting your business in the event you can’t serve guests.

In the hospitality industry, like most industries, you have to be able to serve your guests in order to remain profitable. What would you do if you were not able to rent out rooms due to a fire or another covered loss? Business income insurance can protect you in the case of lost revenue. Understanding this risk and your operation’s specific needs can mean the difference between staying in business or not after a disaster.

Hospitality businesses need general coverages, too.

Hotels, motels, inns, and bed and breakfasts need a whole host of coverage options that are common to most businesses, such as cyber liability insurance, general liability insurance, workers’ compensation insurance, employment practices liability insurance, among others.

To learn more about how specialized insurance can benefit your hospitality business, contact us today.

Let’s discuss your hospitality insurance.

One of our insurance advisors will reach out to you to review your information and present you with the appropriate hospitality insurance solution. There’s no obligation, just good-old-fashioned advice.
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Carr Insurance Agency, Inc. offers comprehensive hospitality insurance throughout Ohio, Kentucky and Indiana, including Centerville,Warren and Hamilton, OH, Louisville, KY, and Montgomery, Greene, Jefferson and Oldham counties.