Business Insurance for Motels

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Business insurance is designed to protect a business owner's financial assets and is an essential investment for a motel.

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

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

While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MOTEL

Example 1: A guest slips in the lobby of your motel after an employee spills a bottle of water on the floor. General liability will cover the cost of the guest’s resulting medical bills.

Example 2: While staying at your motel, a guest is bitten by bed bugs. After one jumps in their bag, their car becomes infested with bed bugs as well. General liability may cover you for medical or extermination costs.

Example 3: You want to join a national motel brand as a part of their franchise but first, you need to meet their insurance requirements. Having the right amount of general liability coverage will ensure you meet the parent company’s expectations.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost of General Liability Insurance

On average, motels in America spend between $350 - $700 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

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.

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Other Types of Coverage motels 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 other types of insurance all motels should obtain.

Commercial Property Insurance

Your property is the cornerstone for your business. If it’s damaged in any way, commercial property insurance will cover the costs of repair and restoration. It will also cover the contents of your property, meaning it may help you replace the exterior and interior structure of your building along with lost, stolen, or damaged merchandise inside.

Business Interruption Insurance

If you need to close your motel due to a natural disaster or severe vandalism attack, this form of insurance will pay you for the average amount of income you would have made if your motel stayed open. If you live in an area that is prone to poor weather, this insurance can be critical to keeping your business afloat if you need to close for several weeks at a time.

Workers Compensation Insurance

Workers compensation insurance covers your employees in the event they are injured on the job. If your employees are subject to particularly strenuous work, you may want to purchase coverage beyond the minimum amount required by law.

Types of Coverage Some motels May Need

In addition to the policies outlined above, there are a few other types of coverage your motel may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Commercial Umbrella Liability Insurance

This form of insurance is available to provide even more protection than a general liability policy. In the case of a serious claim against you, you’ll get the legal resources you need to either fight the charges or settle them out of court. A general liability policy may only cover the cost of a few days in court, while umbrella insurance can cover the costs of a few months.

Data Breach Insurance

If your guests book online, data breach insurance helps you pay for costs associated with a hack or a data breach. This insurance can help protect both your business and your customers in case of financial theft of fraud.

Liquor Liability Insurance

If you have a restaurant on the premises or sell liquor in any form, liquor liability insurance will protect you against the actions that occur within your establishment by customers who are consuming alcohol.

Additional Steps to Protect Your Business

Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

Frequently Asked Questions

What is included in a business owner’s policy?

A typical business owner's policy includes general liability, business interruption, and 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.

What is the difference between business insurance and general liability insurance?

"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.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it's best to be proactive when it comes to protecting your assets. After all, you can't buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.