Motel Business Insurance

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?

Running a motel involves managing high foot traffic, property maintenance, and guest safety. These daily activities bring risks ranging from slip and fall accidents to property damage. To safeguard your investment, review the following breakdown of critical types of business insurance policies for motels.

Business Owner’s Policy (BOP)

A Business Owner’s Policy is often the most cost-effective way to get coverage. It bundles general liability and commercial property insurance into a single package. This is usually cheaper than purchasing the policies separately and covers both your physical location and liability risks.

Example: A fire in the laundry room damages your washing machines and the surrounding structure. A BOP helps cover the cost of repairs and the replacement of the equipment.

Workers’ Compensation Insurance

If you have staff, such as housekeepers or front desk clerks, you likely need workers’ compensation. It covers medical bills, rehabilitation costs, and lost wages if an employee gets sick or hurt because of their job. Most states require this coverage by law as soon as you hire your first employee.

Example: A housekeeper strains their back while lifting a heavy mattress. Workers’ compensation pays for their doctor visits and covers their wages while they recover at home.

Commercial Property Insurance

This policy protects the physical assets of your motel. It covers the building itself and the contents inside against perils like fire, theft, vandalism, and windstorms. If something physically damages your motel, this insurance helps you rebuild or repair it.

Example: A severe hail storm damages the roof of your motel and breaks several windows. Commercial property insurance helps pay for the necessary structural repairs.

General Liability Insurance

This is the foundation of protection for most businesses. General liability protects you against third-party claims regarding bodily injury, personal injury, and property damage. If a guest gets hurt on your premises, this policy pays for legal defense and medical expenses.

Example: A guest trips over a vacuum cord left in the hallway and breaks their wrist. General liability insurance covers their medical bills and your legal fees if they decide to sue.

Cyber Liability Insurance

Motels handle sensitive data, including credit card numbers and personal information. Cyber liability insurance covers the costs associated with data breaches, cyberattacks, and hacking. It pays for notification expenses, legal fees, and credit monitoring for affected customers.

Example: Hackers breach your reservation system and steal the credit card details of past guests. Cyber liability insurance helps cover the costs of notifying the guests and managing the legal fallout.

Commercial Auto Insurance

Personal car insurance policies rarely cover accidents that happen while driving for work. If your business owns vehicles, such as a shuttle van or a maintenance truck, you need commercial auto insurance. It covers injuries and property damage if you or an employee causes an accident in a company vehicle.

Example: Your motel shuttle driver hits another car while taking a guest to the airport. Commercial auto insurance covers damage to the vehicles and any medical costs for the injured parties.

Employee Dishonesty Coverage

This coverage is often part of a crime insurance policy. It protects your motel from financial losses caused by dishonest staff members. If an employee steals money or property, this policy reimburses the business.

Example: A front desk manager pockets cash payments from guests and steals boxes of toiletries. Employee dishonesty coverage reimburses the business for the stolen funds and inventory.

Liquor Liability Insurance

If your motel has a bar or sells alcohol in the lobby, you need liquor liability insurance. It protects your business from liability claims arising from the actions of intoxicated guests. In many places, this is a legal requirement for serving alcohol.

Example: A guest becomes intoxicated at your motel bar and starts a fight in the lobby, injuring another person. Liquor liability helps cover the legal costs and damages related to the incident.

Hired And Non-Owned Auto (HNOA) Insurance

This insurance covers liability when you or your employees drive personal or rented vehicles for business tasks. If an employee causes a crash while running a work errand in their own car, HNOA steps in where personal insurance might fail.

Example: You send a maintenance worker to the hardware store in their personal truck to buy lightbulbs, and they rear-end a sedan. HNOA covers the liability claim against your business.

Business Personal Property (BPP) Insurance

BPP covers movable items used to run your motel, such as office computers, lobby furniture, and maintenance tools. It pays to repair or replace these items if they are lost or damaged due to covered events like theft or fire.

Example: A pipe bursts and ruins the computer and printer at the front desk. BPP insurance helps cover the cost of replacing the office electronics.

Umbrella Insurance

Umbrella insurance provides an extra layer of liability protection. It kicks in when a claim exceeds the limits of your primary policies, such as general liability or commercial auto. It is designed to protect you from catastrophic financial losses.

Example: A guest sues your motel for $1.2 million after a major accident on the property. If your general liability policy limit is $1 million, umbrella insurance covers the remaining $200,000.

These policies work together to form a safety net for your motel. While you may not require every single coverage listed, understanding your specific risks ensures your business remains secure. It is also vital to check if you need specialty insurance for amenities like swimming pools or on-site restaurants.

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 providers look at several distinct risk factors to decide the premium for your motel. They assess how likely you are to file a claim based on the specific details of your operation.

The physical size of your property is the first major factor. A larger motel with high occupancy rates naturally carries a higher risk of guest accidents or liability issues. This generally leads to higher costs. Even for smaller operations, the age of the building and the construction materials used will impact the final price.

Location is also critical. If your motel is situated in an area prone to severe weather events or high crime rates, you can expect to pay more. Additionally, features that attract guests can also attract risk. Amenities such as swimming pools, fitness centers, or extensive parking lots increase your liability exposure and your premiums.

Underwriters will also review your business data. A larger staff increases the chance of employee injuries, which drives up Workers’ Compensation costs. Higher revenue streams can also lead to increased liability premiums. Finally, providers look at your history. A track record of prior claims makes you a higher risk to insure. Other details, such as your legal business structure and the use of company vehicles, will also adjust the final calculation.