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.

Motel Business Insurance Requirements

Motels are generally not mandated by federal law to carry specific insurance policies. However, certain types of insurance may be required depending on state laws, local regulations, and the nature of your business operations.

Workers’ Compensation Insurance: In most states, if you have employees, you’re required to carry workers’ compensation insurance to cover medical expenses and lost wages for work-related injuries or illnesses. However, Texas does not mandate this coverage for private employers, though it’s still highly recommended to protect both your employees and your business.

Commercial Auto Insurance: If your business owns vehicles used for work purposes, most states require commercial auto insurance to cover liabilities arising from accidents. In Texas, commercial auto insurance is mandatory for business-owned vehicles.

General Liability Insurance: While not legally required, general liability insurance is often necessary to secure contracts and is highly recommended to protect against claims of property damage or bodily injury. Some clients may require proof of this coverage before doing business with you.

It’s important to check with your local city or county government to understand specific licensing and insurance requirements applicable to your area.

How Much Does Motel Business Insurance Cost?

Motel business insurance typically costs around an average of $67 to $99 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.

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.

Tips To Lower Your Motel Business Insurance Costs

Insurance costs can add up quickly for motel companies, but there are practical ways to keep your premiums manageable without skimping on coverage. The key is to understand which factors you can control and take proactive steps to minimize risk.

• Conduct Risk Management. It’s important that you maintain a good safety plan with regular emergency preparedness. This means maintaining your property with adequate lighting, security systems, and up-to-date electrical and plumbing. Part of your emergency preparedness should include fire safety and emergency planning procedures with employees.
• Bundle your policies. Combine general liability, property insurance, and other coverages into a Business Owner’s Policy (BOP) to qualify for a multi-policy discount.
• Consider Hired and Non-Owned Auto (HNOA) coverage. If you or your employees use personal vehicles for work, HNOA can be more cost-effective than a full commercial auto policy.
• Keep a clean claims history. Avoiding claims through proper training and safety procedures can lower your risk profile and lead to reduced premiums over time.
• Invest in workplace safety. Implementing safety protocols and training for employees helps reduce the chances of injury claims and can lower workers’ compensation costs.
• Raise your deductible. Opting for a higher deductible can lower your monthly premium, but be sure your business can absorb the extra out-of-pocket cost in case of a claim.
• Review your coverage annually. Adjust your policies as your business evolves to avoid paying for coverage you no longer need.
• Compare quotes from multiple insurers. Rates vary widely, so shopping through Insuranceopedia can help you find the best deal for your current needs.

Taking a strategic approach to your insurance planning can make a real difference in your bottom line. With a little research and regular review, you can stay protected and cost-efficient at the same time.

Following these steps helps ensure you’re properly insured and set up to handle risks confidently and professionally.