coverages and costs. when it comes to tacks, this is what matters to the insured. they want to know that their hotel insurance will cover them when they need it and it won’t cost them a small fortune. You need to put hotel insurance coverages and costs into perspective, so you can answer the most common questions potential customers have. With this information updated for 2022, you can assure clients that they are getting coverages designed by experts and designed for the hospitality industry at a competitive price in the market.
what should hotel insurance cover?
There’s plenty of room for things to go wrong in hotels. That’s why they need broad, comprehensive insurance policies that can cover them, no matter if there’s a kitchen fire or a slip in the pool.
Reading: How much does hotel insurance cost
here is a list of the coverages that many hotels need:
- General Liability: A basic gl policy helps cover claims associated with everyday business activities, such as guest falls on premises, guest property damage, restaurant operations, and accidents related to recreational activities.
- alcoholic beverage liability: a specific liability policy designed to protect hotels from the cost of being held liable for incidents resulting from the service of alcoholic beverages.
- commercial umbrella: a supplemental policy that provides hotels with additional liability coverage so they can maintain coverage limits beyond what is available on their main gl.
- Commercial Auto: A comprehensive policy that covers commercial vehicles if they are involved in an accident, vandalized, or stolen. also includes auto liability coverage for costs related to property damage or injuries caused by a crash.
- garagekeepers: a policy that covers cars that have been parked by hotel valet service.
- Property: General property insurance covers the property of the hotel business, protecting physical buildings and structures from covered perils.
- cyber liability: a policy designed to cover the costs associated with cybercrime and data breaches.
With Distinguished’s primary hotel insurance, this coverage comes conveniently bundled together to give your customers more coverage and convenience at lower costs. for example, our primary hotel insurance combines general liability, liquor liability, commercial auto, and property insurance. it also comes bundled with our dedicated claims team to make life easier for you and your clients. You can even add high-limit general hotel insurance (limits up to $170 million) and cyber liability, so your clients get the entire hotel. insurance coverage they need. still have doubts? our overall policies support more than 20% of hotel rooms in the country, and it’s hard to go wrong with a resume like that.
Do you want to know more? Register your agency or chat with one of our insurance experts to learn more.
why hotels can’t afford to be underinsured
It can be easy for hotels (and any business owner, really) to decide to go for the cheapest insurance policy. But, as any insurance broker knows, that would be a colossal mistake. hotels, in particular, need to make sure they’re not underinsured because a lot can go wrong on their premises.
These are just three reasons to help convince your customers that they’d rather be safe than sorry.
1. fire and water damage
When you have so many people in one place, anything can happen. In the worst case, anything can result in fires, floods, and massive property damage. Whether it’s a stray cigarette causing $250,000 in damage or a guest flooding a hotel with 400,000 liters of water, these accidents are just one mistake away.
2. accidents around the pool add up
Pools and spas can be a huge draw for attracting guests, but they’re also magnets for injuries and lawsuits. In 2022, Disney was sued for $100,000 after a woman claimed that she suffered permanent injuries while using one of her pools. If the mouse house can be sued in the happiest place on earth, it’s probably a good idea for your client’s hotel to be prepared in case it happens to them too.
3. human trafficking on hotel premises
It’s not something anyone wants to think about, but it’s an endemic problem in the US. uu. and all over the world, and it often happens in hotels. hotels are not only seen as easy places for trafficking to occur, but they sometimes unknowingly hire these victims to work in their hotels.
human trafficking is obviously a heinous thing in itself. but from an insurance perspective, it’s also a huge potential problem that could expose the hotel to liability lawsuits.
how much does hotel insurance cost?
For something as wide and varied as hotel insurance, there is no average price you can quote to your clients. however, this won’t stop them from asking, and it’s always helpful to give them some kind of answer before you can get an actual quote that reflects your specific circumstances.
hopefully, you should be able to give them a rough estimate using some historical data and basic math. According to research conducted by CBRE, the average cost of hotel insurance in 2021 was around 1.9% of operating income. If you want to give a more precise number, cbre has also broken down the estimated cost of hotel insurance by type of hotel, from limited service to resorts.
Please note that these costs are averages, so depending on the details of your client’s hotel, the price could be higher or lower. While this chart isn’t always 100% accurate, it should be enough to give your clients the ballpark they need before getting a firmer quote based on their situation.
explaining hotel insurance costs
The section above can give your customers an idea of what their premiums might be like, but it doesn’t explain why. The following is a summary of the costs behind each type of coverage and some of the factors that go into the cost of hotel insurance.
General liability insurance premium depends on several factors, including class code, size (income or number of bedrooms), number of floors, services offered, and loss history. Distinguished programs use a rating system based on the number of hotel rooms, which provides a good measure of hotel exposure. A property with a significant loss history will also see higher GL premiums. subscribers will discuss the hotel’s loss experience and its risk management practices and protocols. better managed risks allow insurers to offer a more favorable premium because these hotels are actively demonstrating that they are doing a good job of managing their properties.
As with general liability policy, the cost of general hotel insurance is calculated based on the number of hotel rooms. An insurer will also look at the hotel’s loss experience, accommodations for secondary exposures, auto exposure (including the number of vehicles scheduled on the commercial auto policy), and the price of the underlying general liability policy.
Vehicle types and how they are used drive commercial auto insurance rates. It costs more to insure the vehicles that transport guests to and from hotel services or the airport than it does to cover standard service vehicles. passenger transportation is a major liability exposure for hotels.
garage insurance is required if the hotel offers valet parking. Insurers will discuss hotel best practices for hiring drivers, including whether MVR background checks are performed, and the type of driver training offered when assessing risk.
As with any building, the type of construction (building materials such as wood frame, brick, steel, or stone, and the age of the building), occupancy, and protection are factors that influence the price of property coverage. for hotels. Safety features, such as proximity to a fire station, fire protection, and security protocols, are also considered when determining premiums. amenities must also be considered. restaurants are a great fire exposure for hotels. therefore, it is important to understand safe operating practices when it comes to kitchen appliances, equipment maintenance, and grease handling.
The price of cyber insurance premiums is largely determined by the size of the hotel property. the larger the hotel, the greater its exposure and the higher the premium. more employees and guests increase the potential for breaches and other cyber vulnerabilities. This includes access to point-of-sale (POS) systems, public Wi-Fi networks, mobile access cards, and third-party data-sharing networks such as online travel agents (otas).
learn more about distinguished hotel insurance
Hotels are big business for insurance companies and require a lot of experience and knowledge to get it right. If you have questions about the details of Distinguished hotel insurance offerings, please contact our team so we can clarify how we can help you get your clients the best possible insurance program for their hotel or resort. If you are interested in taking the next steps with distinguished, you can register your agency here or explore our insurance packages on our hotel programs page.