Last Updated: February 22, 2024, 8:34 am by TRUiC Team

Hookah Lounge Business Insurance

Getting business insurance for your hookah lounge is essential.

Insurance is crucial for safeguarding hookah lounges against various risks. It provides protection to your business from liability in case of physical injury, damage to property, and financial loss.

For example, a customer may accidentally spill burning charcoal resulting in a fire. Thankfully, there is insurance to deal with a scenario like that.

We’ll help you find the most personalized and affordable coverage for your unique business.

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Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Hookah Lounge

General liability insurance is — generally speaking — one of the most important insurance policies for hookah lounges. 

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

General liability insurance will cover many risks. However, it may not cover all the risks your business is exposed to. These risks may be covered by dedicated policies including those that provide: 

  • Commercial property coverage: This insurance covers the physical property of the hookah lounge, such as the building, furniture, and equipment, against damages from fire, theft, or natural disasters.
  • Liquor Liability Insurance: If the hookah lounge serves alcohol, liquor liability insurance is essential. It protects the business from lawsuits related to injuries or damages caused by intoxicated patrons.
  • Product Liability Insurance: Since hookah lounges sell products, such as tobacco, hookahs, and other accessories, product liability insurance is necessary to protect against potential claims related to faulty or defective products.

When the time comes to purchase insurance, you’ll have to decide whether to go with one of the following types of insurer or the other:

  • Traditional brick-and-mortar insurers: This category includes some well-established operators, such as Chubb and Farmers, that set pricing based on actuarial risk. 
  • Online insurers: Insurtechs, like Clearcover and Next, may offer usage-based insurance, which uses data from IoT devices to determine the risk of insuring an individual. This type of insurance is particularly popular because it’s easier to obtain online and premiums are lower.

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Cost of General Liability Insurance

The average hookah lounge in America spends between $500-$1,100 per year for $1 million in general liability coverage.

Compare the average cost of general liability insurance for a hookah lounge business to other professional industries using the graph below.

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.

A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

Graph showing average price of general liability insurance prices per industry

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Find the Best Rate

Discover the best coverage at the lowest rate in our affordable business insurance review.

Common Situations That General Liability Insurance May Cover for a Hookah Lounge

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Example 1: A customer with norovirus uses your hookah, and after which the mouthpiece is not properly cleaned. If there’s an epidemic of norovirus that breaks out due to your hookah lounge, you can use general liability insurance to cover claims that arise.

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Example 2: A small business in the area sues you because your name closely resembles theirs. Your general liability coverage protects you from having to pay the full legal costs in the event of a serious lawsuit.

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Example 3: While dropping off a vehicle at an auto shop, you accidentally back the customer’s vehicle into the garage bay door. General Liability Insurance would cover the damage to the customer’s vehicle and the auto shop’s garage door.

Other Types of Coverage Hookah Lounge Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:

Property Insurance

For hookah lounges that own their own space, property insurance is available to protect the grounds and building from natural disaster and criminals alike. This insurance will provide the funds to rebuild or repair the land so that business owners won’t have to pay a handyman or construction company from their own profits.

Business Interruption Insurance

Business interruption insurance covers businesses that need to close for an extended period of time. So if an electrical fire causes the business to be closed for 3 months while being repaired a business owner has a way to recoup some of the income that they will lose due to the closure. Hookah bars are dependent on the foot traffic they receive, so this type of insurance can help owners stay afloat while they wait for the repairs to conclude.

This coverage is generally offered in a Business Owners’ Policy (BOP)

Workers' Compensation Insurance

If your hookah lounge has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.

Commercial Umbrella Insurance

Umbrella coverage allows you to extend above and beyond the standard limits of your other business insurance policies. If you are faced with a large lawsuit or other claim situation, there’s a possibility that the coverage limits of your standard policies will be insufficient. In this case, your umbrella policy will allow you to surpass these limits.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.

Here are several things you can do to better protect your hookah lounge business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
  • Stay up to date with business licensing.
  • Maintain your corporate veil.


Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.

A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

It is certainly a good idea to take out business insurance as early as possible. Just like operational activities, preparatory tasks can expose both a hookah lounge and its owner to a range of risks. 

You should consult with an insurance professional to help determine what type of insurance is necessary for your hookah lounge; recommendations are likely to include general liability insurance, liquor liability insurance, and product liability insurance.

Not necessarily. Certain exceptions may be written directly into your hookah lounge business insurance policy, and some perils may be entirely uninsurable.

Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.

An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.