Insurance for Hotels and Other Lodging Businesses

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Insurance can cover many issues, from property damage to injuries and accidents to injury. These are the most important considerations.

Protecting your property
What’s a lodging business without lodging facilities? Your physical property is the most important part of any lodging business. It must be protected from damage. Your property insurance should be a crucial part of your insurance package. It should protect you against vandalism and unavoidable weather damage.

Even a small home-based lodging business, such as a bed and breakfast or vacation rental property, must be insured under commercial property insurance. Although the limits may vary between businesses, the basic idea is that you want to be protected in the worst-case scenario. Therefore, ensure that all furniture and property evaluations are accurate.

Terms you should know: ACV and Replacement Cost

You need to know the difference between actual cash value (ACV), and replacement cost coverage when insuring commercial property. The first covers all current costs associated with replacing any lost items. The latter covers all actual cash value of the property or items. Property value declines, and the cost to replace property or items increases. This can cause a substantial gap between cash values and replacement costs. ACV doesn’t always provide the coverage that business owners need. Although replacement cost coverage is more advantageous, it’s important to understand both coverage types in order to get the best possible coverage.

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Artwork and collectibles
Standard property insurance can cover the basics, but expensive and difficult-to-replace interior finishes and furniture will require additional protection. The standard coverage limits the cost of replacing such items.

Although replacement cost coverage is often the wisest choice, you should consider covering antiques and collectibles for their actual cash values. These items can be difficult to replace and their cash value often increases over time. Replacement coverage may leave you at a loss or leave you tied to your insurance company as they determine what is a reasonable replacement. Insurers will try to reduce their payouts.

Business Interruption
What happens when your lodging business is temporarily not able to offer lodging? This is not uncommon. In severe weather, or when buildings are damaged, it could result in long-term repairs that make it impossible to provide lodging for guests. These losses of revenue are often not covered by standard property coverage.

You can add business interruption coverage to your existing insurance package to ensure that you are protected in the event you are unable or temporarily unable to continue business as usual. The assurance you have will allow you to rest easy and continue operating your business as usual.

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Catastrophic Risques
Learn about the weather and landscape around your business and speak to your agent to determine what risks are covered under your property policy. You might be surprised to discover that some catastrophic risks require additional coverage. Floods, earthquakes and volcanic eruptions are all considered to be catastrophic risks and may require special insurance. It depends on the geography of the area. Some risks may be less common in certain parts of the country but can be quite tangible elsewhere.

Liability insurance
A good general liability policy will protect you while you plan for the more specific coverages lodging businesses require. There are many things that can happen to guests who stay in your hotel, inn, and other lodging businesses, such as injury, theft, illness, or illness. You can protect yourself against personal injury or property damage from your guests by purchasing a general liability policy.