Hotel Insurance Costs and Coverages for Brokers in 2022 – Distinguished

As an insurance broker, it’s crucial to understand the coverages and costs associated with hotel insurance. Your clients want to know that their hotel insurance will provide comprehensive coverage without breaking the bank. By offering updated information for 2022, you can assure potential customers that they are getting expertly designed coverages tailored to the hospitality industry at a competitive price.

What Should Hotel Insurance Cover?

Hotels face numerous risks, making it essential to have broad, all-encompassing insurance policies. Whether it’s a kitchen fire or a slip in the pool, hotels need coverage that can protect them from a wide range of potential issues.

Reading: How much does hotel insurance cost

Here are some of the coverages that many hotels require:

• General Liability: This basic policy covers claims associated with everyday business activities, such as guest falls, property damage, restaurant operations, and accidents during recreational activities.
• Alcoholic Beverage Liability: Specifically designed to protect hotels from the costs associated with incidents involving the service of alcoholic beverages.
• Commercial Umbrella: A supplemental policy that provides additional liability coverage beyond the limits of the main general liability policy.
• Commercial Auto: Comprehensive coverage for commercial vehicles, including protection against accidents, vandalism, theft, and liability for property damage or injuries caused by crashes.
• Garagekeepers: Coverage for cars parked by hotel valet service.
• Property: Insurance that covers the hotel’s physical buildings and structures, protecting them from various perils.
• Cyber Liability: Coverage for costs associated with cybercrime and data breaches.

Distinguished offers primary hotel insurance that conveniently bundles these coverages together, providing clients with more comprehensive protection at lower costs. In fact, our primary hotel insurance combines general liability, liquor liability, commercial auto, and property insurance. We even offer optional high-limit general hotel insurance and cyber liability to ensure your clients have the complete coverage they need. With over 20% of the country’s hotel rooms supported by our policies, you can trust in our expertise.

If you want more information, you can register your agency or chat with one of our insurance experts.

Why Hotels Can’t Afford to be Underinsured

Choosing the cheapest insurance policy might seem tempting, but it’s a massive mistake for any business owner, especially hoteliers. Hotels face numerous risks, and being underinsured can have catastrophic consequences. Here are three compelling reasons to convince your clients to prioritize comprehensive coverage:

1. Fire and Water Damage

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With so many people in one place, accidents can easily happen, leading to fires, floods, and substantial property damage. A single mistake, such as a stray cigarette or a guest causing a major water incident, can result in significant financial losses.

2. Accidents around the Pool Add Up

Pools and spas are attractive amenities for guests, but they also pose a high risk of injuries and lawsuits. Even in the happiest place on earth, like Disney, accidents can occur. To protect your clients’ hotels, it’s crucial to be prepared for potential pool-related incidents.

3. Human Trafficking on Hotel Premises

Human trafficking is a pressing issue worldwide, and unfortunately, hotels are often involved. They can unknowingly hire victims or become a location for this illegal activity. From an insurance perspective, human trafficking poses a significant liability risk, exposing hotels to potential lawsuits.

How Much Does Hotel Insurance Cost?

Hotel insurance costs vary widely based on individual circumstances, making it impossible to provide an average price. However, it’s helpful to provide clients with a rough estimate before obtaining a personalized quote.

In 2021, hotel insurance costs averaged around 1.9% of operating income, according to research by CBRE. For a more precise estimate, CBRE has also categorized hotel insurance costs by hotel type, ranging from limited service to resorts.

Please note that these costs are averages, and the final price will depend on specific hotel details. The chart should give your clients a general idea before obtaining a more accurate quote based on their unique situation.

Explaining Hotel Insurance Costs

While the previous section provided estimated premiums, it’s essential to explain the factors influencing these costs. Here’s a breakdown of the costs associated with each type of coverage and the factors affecting hotel insurance prices:

General Liability

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Premiums for general liability insurance depend on factors such as class code, size (income or number of bedrooms), number of floors, services offered, and loss history. Distinguished uses a rating system based on the number of hotel rooms to assess exposure. Hotels with a significant loss history may face higher premiums. Insurers will discuss a hotel’s loss experience and risk management practices to determine premium rates.

Commercial Umbrella

The cost of commercial umbrella insurance, like general liability, is calculated based on the number of hotel rooms. Insurers also consider loss experience, secondary exposures, auto exposure (including the number of vehicles covered), and the price of the underlying general liability policy.

Commercial Auto

Commercial auto insurance rates depend on vehicle types and their purpose. Vehicles used for passenger transportation, such as shuttles, pose higher liability risks than standard service vehicles.

Garagekeepers

Hotels offering valet parking require garage insurance. Insurers will evaluate the hotel’s hiring practices, including driver background checks and driver training, to assess risk.

Property

Property insurance costs for hotels are influenced by factors like construction type (wood frame, brick, steel, stone), building age, occupancy, and level of protection. Safety features and amenities, such as proximity to a fire station, fire protection systems, security protocols, and safe operating practices in the kitchen, are also considered in determining premiums.

Cyber Liability

Cyber insurance premiums for hotels are primarily based on property size. Larger hotels face greater exposure and higher premiums due to increased employee and guest numbers, which heightens the potential for breaches and cyber vulnerabilities. Factors such as access to point-of-sale systems, public Wi-Fi networks, mobile access cards, and data-sharing networks impact the price as well.

Learn More About Distinguished Hotel Insurance

Hotels are a significant industry for insurance companies, requiring extensive experience and expertise. If you have any questions about Distinguished’s hotel insurance offerings, our team is ready to provide clarification and help you find the best insurance program for your clients’ hotels or resorts. You can register your agency or explore our insurance packages on our hotel programs page.

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