Motel Business Insurance (2025)

Why Do Motel Businesses Need Insurance?

Motel businesses have to contend with a lot of financial risk. In particular, there are risks against accidents, injuries, and property damage. General liability insurance can provide protection for a motel business against claims of property damage, bodily injury, or even lawsuits.

In some places, general liability insurance may be required, and commercial property insurance can protect your assets including the building itself and items within it from covered events like natural disasters, vandalism, or theft.

What Insurance Do Motel Businesses Need?

Motels need protection against common risks like accidents, injuries or damage associated with guests and staff alike. To protect yourself and your business, here’s a breakdown of the most important business insurance policies to consider.

General Liability Insurance

General liability insurance is the foundational insurance policy for most small businesses. It protects you from third-party claims of bodily injury, property damage, and personal injury. If a guest slips and falls at your motel, general liability pays for legal fees, repairs, or medical bills.

Example: During a stay a guest slips and falls outside a broken ice machine and is injured. General liability insurance can cover the cost of any issues and any legal fees if a lawsuit follows.

Workers’ Compensation Insurance

Workers’ compensation insurance covers your employees if they get injured or become ill as a result of their job. It covers medical bills, lost wages, rehabilitation, and even death benefits. It’s also required by law in most states if you have employees.

Example: One of your employees is injured while working at your motel. Workers’ comp pays for their ER visit and covers time off while they recover.

Workers’ compensation insurance is required for motel businesses with employees in almost every state.

Commercial Auto Insurance

If you or your employees drive for business purposes, personal auto insurance likely won’t cover accidents. Commercial auto fills that gap. It covers vehicle damage, injuries, and liability if you’re involved in an accident while driving for work.

Example: One of your employees rear-ends a car while driving to your motel in the company truck. Commercial auto covers the damages and medical costs.

Employee Dishonesty Coverage

This is typically part of a crime insurance policy, one that can protect your company against losses associated with dishonest employees. If an employee steals things, or commits fraud, this can protect your motel against those losses.

Example: One of your employees steals cash from the register and part of your inventory including towels and bathrobes. This would cover the losses for your business caused by your employees including the cost of those stolen items.

Business Owner’s Policy (BOP)

A BOP bundles general liability and commercial property insurance into one policy, often at a lower cost than buying them separately. It covers property damage to your business location or equipment, along with liability protection.

Example: A fire in your office damages tools and business records. A BOP helps you recover both the physical and financial losses.

Commercial Property Insurance

If you own or lease space for your motel business, this policy covers the physical building and the contents inside. It specifically covers fire, vandalism, theft, weather damage, and more—anything that could physically impact your business premises or equipment stored there.

Example: A storm causes water damage to your office, ruining thousands of dollars’ worth of supplies. Commercial property insurance helps you recover.

Liquor Liability Insurance

Liquor liability insurance is a form of protection if your motel serves alcohol. This is often a legal requirement to protect your motel against liability related to intoxicated guests.

Example: A guest drinks too much and gets in trouble for causing damage on your property and injury to an employee. This could help cover those liabilities.

Business Personal Property (BPP) Insurance

BPP is a type of property insurance specifically for movable items like tools, computers, and office furniture used in your business. This will cover the repair or replacement of these items if they are damaged or destroyed due to fire, theft, or other covered events.

Example: A fire in your office destroys tools and supplies. BPP helps cover the cost to replace those essential business items.

Hired And Non-Owned Auto (HNOA) Insurance

This policy covers liability if you or your employees use personal or rented vehicles for business purposes. If an employee causes an accident while using their personal car for a work errand, HNOA provides liability coverage where personal auto insurance might fall short.

Example: You send an employee to pick up spare breakfast items for your motel in their own car, and they cause a fender bender. HNOA helps with the liability claim.

Umbrella Insurance

Umbrella coverage provides extra protection beyond the limits of your existing policies, like general liability and commercial auto. Once a claim exceeds the limits of your underlying policy, umbrella insurance kicks in to cover the remaining amount.

Example: You’re sued for $1 million after a guest is injured. Your general liability policy caps at $500,000. Umbrella insurance can cover the remaining $500,000.

Cyber Liability Insurance

Cyber liability insurance covers losses related to cyberattacks, data breaches, and other digital risks, particularly important if you store client info online. It covers legal costs, notification expenses, and credit monitoring for affected clients.

Example: Your bookkeeping software is hacked, and client addresses and payment details are leaked. Cyber liability helps manage the fallout.

Together, these policies form a comprehensive insurance plan for all motels. While not every business needs all of them, understanding your risks and matching them with the right coverage ensures your operation stays protected, whether you’re a solo contractor or manage a growing team.

It is equally important to consider any specialty Insurance you might need based on the items you offer like a pool or a restaurant.

Cheapest Motel Workers’ Compensation Insurance

The cheapest option for workers’ compensation insurance is offered by Sentry, with average annual costs around $2,421.

Note: These estimates are illustrative figures for a small motel, based on national averages. Workers’ Compensation premiums are heavily influenced by your state, total employee payroll, job classifications, and your business’s claims history.

Cheapest Motel General Liability Insurance

The cheapest option for General Liability insurance is offered by AmTrust, with policies starting at $725 per year.

Note: These estimates are illustrative figures based on national averages for a small motel with a low-risk profile. Actual premiums will vary based on your specific location, guest amenities (like a pool), sales revenue, and chosen coverage limits.

Cheapest Motel Business Owner’s Policy

The cheapest option for a Business Owner’s Policy (BOP) is Travelers, with average annual premiums around $1,092.

Note: These estimates are illustrative figures based on national averages for a BOP, which bundles General Liability and Commercial Property insurance. The final cost depends heavily on the value and age of your building, your motel’s location, and the property coverage limits you select.

How Much Does Motel Business Insurance Cost?

Motel business insurance typically costs around an average of $86 to $370 per month, depending on many factors, including where your business is located and your claims history.

The biggest factor is the size of your motel, the location, the construction of the physical building, and the amenities you offer.

Insurers also consider the amount of coverage you choose and whether you package policies together. While it may be tempting to go with the cheapest option, it’s important to choose a plan that truly protects your business from its most likely risks.

Note: These figures are national estimates for small to medium-sized motels. Costs are based on average risk profiles, typical coverage limits, and average business size. Actual premiums will vary significantly based on your motel’s specific location, building value, annual revenue, total payroll, claims history, and chosen policy limits.

How Is Your Motel Business Insurance Cost Calculated?

Insurance underwriters calculate your motel business insurance premium based on several key risk factors unique to your business.

For starters, the size of your motel will directly influence the cost. Larger motels that have a higher occupancy rate have an increased potential for liability or accidents which directly increases insurance premiums.

Even if you have a small motel, the materials used in its construction and the age of the building itself can play a role in your costs.

Motels located in areas that are prone to natural disasters like hurricanes or floods as well as areas with high levels of crime will typically face higher premiums.

As mentioned, the amenities that your motel has like parking centers, swimming pools, or fitness centers can all play a role in the associated level of risk and subsequent insurance premiums.

An insurance underwriter will review the number of employees you have as well as your revenue; the greater your workforce the higher your risk of accidents or injuries especially related to workers compensation Insurance and the bigger your payroll, the more likely you are to increase your liability.

Underwriters also look at your claims history—if you’ve filed previous insurance claims, you could be seen as a higher risk. Whether you own or lease business vehicles, and the type and amount of coverage you choose all factor into the cost as well. Even your business structure (LLC vs. sole proprietor) can affect how your policy is priced.