What Insurance Do I Need for Hotel and Motel Insurance in Connecticut?

Want to read more about various types of hotel and motel insurance in Connecticut? Read along!

There are more than 54,200 hotels and approximately 17,000 BnBs in the US. Whether you are running a 5-star hotel or a cozy BnB, you need more than a few types of insurance to provide your business with an extra layer of financial protection. 

Running your own hotel can be very challenging. Even if you are one hell of a business operator, your hospitality business will face its own share of risks and problems. Before opening your doors to guests, you need to get insurance at any cost. You might need more than a few types of insurance to protect your business from all the what-ifs and buts. 

Here are the ten types of insurance coverage that your hospitality business needs: 

1. Liquor Liability Insurance

 

If you serve liquor on your premises, you need liquor liability insurance—which can also be added to a general liability package. The policy provides coverage for legal fees, bodily injury, and medical expenses to cover the damage that an intoxicated person causes after the policyholder serves them alcohol. However, liquor liability insurance doesn’t cover:

• • Libel and slander: General Liability Insurance protects against the claims of libel and slander.

• Incidents related to underage drinking: To prevent incidents related to underage drinking, train your staff to identify fake IDs.

• Damage to the business property: Liquor liability insurance doesn’t cover property damage, so you would need commercial property insurance to back your business property financially.

The businesses that generally require liquor liability insurance include:

• Bars
• Hotels
• Motels
• Breweries 
• Wineries 
• Grocery stores
• Liquor stores
• Convenience stores 

The average cost of liquor liability insurance is between $900 to $1200 per year, while the actual number depends on the limit and deductible you select. The other factors that affect the cost include:

• Type and volume of alcohol sold
• Hours of operation
• Type of business/establishment (bar, hotel, wineries)
• Claims history
• Server training
• Security 
• Annual revenue from alcohol sales

 

2. Innkeeper’s Liability Insurance

 

Every business that has anything to do with lodging should consider investing in innkeeper’s liability insurance. Innkeeper’s liability insurance is a speciality coverage policy that covers motel and hotel owners for liability arising from their responsibility to keep their guests’ possessions safe. Innkeeper’s liability insurance policies vary from state to state but generally have a $1000 limit per guest.

The law suggests that hotels, motels, and BnBs must have coverage for customer belongings. This insurance policy protects your business from claims for:

• Damage to guests’ properties
• Lost possessions 
• Theft of guests’ belongings

This policy pays for the damage caused to the guests’ possessions while they are on the insured premises and in the insured’s possession.

 

3. Umbrella Liability Insurance

 

Umbrella liability insurance is an optional insurance that fills the gap that other liability insurances leave behind. It is a low-cost way of getting extra liability coverage and an additional layer of protection. Umbrella liability insurance typically covers:

• Bodily injuries
• Personal injuries/ liability situations
• Legal defense costs

It’s just a fact that no insurance covers everything, and it’s the same case with umbrella liability insurance, as it doesn’t cover:

• Intentional damage: If you deliberately hit one of your guests, the umbrella insurance policy wouldn’t be able to help you. 

• Damage to your own property: It only covers damage caused to someone else’s property. If you want to protect your business property, get commercial property insurance. 

• War-related damage: Chances of finding an insurance policy to cover war-related damage is next to none. 

Still not able to understand what umbrella insurance covers? Here are a few scenarios to help you understand better:

• Your guest falls due to loose flooring. The medical expenses of treating the fracture will be covered. 
• The motel driver gets into a car accident and can’t pay for it through other insurance plans because of the benefit limits.

So, there are a number of factors that affect the cost of umbrella insurance, including:

• Your location
• Credit history 
• Your net worth
• Industry and risk
• Number of employees
• Number of vehicles

On average, this policy costs between $40 to $45 monthly for $1 million of additional charges—however, there are several factors that affect the cost.

 

4. General Liability Insurance

 

According to a CDC report, over one million Americans sustain a fall injury each year, with around 17,000 deaths recorded annually. 

No matter how safe your hotel is, incidents like a guest falling down the stairs or the motel driver unintentionally wrecking a guest’s car are impossible to prevent. Your hotel needs general liability insurance to cover claims involving bodily injuries and property damage caused by you or an employee. The insurance helps protect your hotel from claims involving:

• Bodily injuries 
• Property damage 
• Advertising injury
• Medical expenses

However, general liability insurance doesn’t cover:

• You and your employee intentionally causing an injury 
• Your commercial property
• Your commercial vehicles
• Your employee getting injured

The average general liability cost in the US is between $35 to $45 monthly, but before choosing a general insurance policy, read about claims-made policy and occurrence policy. The occurrence policy provides coverage regardless of the policy being canceled. On the other hand, the claims-made policy covers the claims made in the specified period set. Thus, an occurrence policy is more expensive than a claims-made policy because there is no limit set.

 

5. Employment Practices Liability Insurance

 

According to a report, EEOC received 27,978 claims of workplace harassment in 2017. Every business requires EPLI—whether it’s an advertising company or a hotel. 

Employment practices liability insurance, also known as EPL or EPLI, covers your business when an employee files a lawsuit against discrimination, harassment, or wrongful termination. EPLI protects you from losses associated with work-related issues revolving around sexual harassment and discrimination.

With the rise of movements like #MeToo and #TimesUp, people are not scared to talk about issues like harassment and discrimination.

EPLI covers your hotel against claims of:

• Sexual harassment 
• Wrongful termination 
• Defamation 
• Work-related emotional distress
• Wrongful failure to promote

The average premium cost of employment practices liability insurance is between $800 to $5000 per year. A small business will likely pay an annual premium of $1000 to $1300.

 

6. Equipment Breakdown Insurance

 

Also known as boiler and machinery insurance, or mechanical breakdown insurance, equipment breakdown insurance is a form of commercial insurance that covers the losses that occur due to mechanical and electrical breakdown of any equipment. 

It covers the damage caused by mechanical breakdown, pressure systems breakdown, and electrical breakdown. Equipment breakdown insurance covers various types of equipment, including:

• Computers and telephones
• Generators
• Elevators
• Water pumps
• Transformers
• Refrigeration devices
• Electrical panels
• Ventilation systems
• Security systems

Equipment breakdown insurance covers the cost of repairing and replacing broken equipment, expenses during the replacement period, the lost income due to damaged equipment, and property damage liability costs. 

It protects your hotel’s mechanical, electrical, and pressure systems from unexpected breakdowns that can cause business interruption. Here are the key benefits of investing in equipment breakdown insurance:

• You get the money to repair and replace the equipment. From refrigerator systems to computer systems and CCTVs, hotels have a number of expensive equipment that cost quite a lot, so having an extra layer of protection is always a plus! Food industry equipment is really expensive. 
• It covers the loss of business until the equipment is repaired. For example, the refrigerator systems break down, and now you have no food to serve. Can you imagine running a BnB or a hotel without food? With equipment breakdown insurance, you will be able to cover the loss of income due to your hotel being out of commission for some time.
• Even before you start taking in guests and officially running the business, you must have already spent millions of dollars on expensive equipment. From refrigerators to CCTVs and TVs, there’s a lot that a hotel needs—equipment breakdown insurance will ensure that you can get the equipment repaired or replaced if it breaks down at any point. 

 

7. Worker’s Compensation Insurance

 

Slips, falls, and trips are the most commonly sustained injuries that both, employees and guests experience. The worker’s compensation insurance is legally required. Some of the most common injuries in the hospitality industry include:

• Slips, falls, and trips
• Burns
• Repetitive motion injuries 

Worker’s compensation insurance benefits both, employees and business operators; they cover the costs of injuries sustained by the employees and protect the business by reducing financial risk.

Worker’s compensation insurance covers:

• Lost wages: Wage replacement is provided to the injured employee until they have recovered completely. 
• Medical expenses: Covers the cost of medical expenses, including doctor visits, surgeries, and other healthcare services. 
• Care for disabled employees: Short or long-term disability insurance is provided to the employees. 
• Funeral expenses: Funeral expenses are paid for the employees who die as a result of workplace injuries.
• Long-term care: Some injuries take time to heal. For example, your employee falls down the stairs and fractures their leg—in this case, the expenses of ongoing care will be covered. 

Illness: Some worker’s compensation insurance plans cover illnesses as well. Say, your janitor was exposed to some toxic gas and got sick—the plan will most likely cover the medical expenses, including doctor visits, medical equipment, and medications.

 

8. Commercial Property Insurance

 

Commercial property insurance can protect your hotel from losses caused by damage to the physical structure. Commercial property insurance covers:

• Equipment like computers, laptops, and phones
• Furniture and equipment
• Inventory
• Signs and fences
• Landscaping
• Manufacturing equipment
• Important records and documents

It doesn’t cover:

• Employee injuries
• Cyberattacks

The average cost of commercial property insurance is between $65 to $800 per year—it may vary depending on the value of your property and business assets. Here are the factors that determine the cost of annual premiums:

• Location: If your area is prone to storms and other natural disasters, a higher premium will be charged. 
• Your industry: The premium of a manufacturing company will be higher than a traditional office-based setting, as they have more expensive machinery. 
• Safety measures: If you have CCTVs, fire alarms, and water sprinklers, the cost of premiums won’t be much as you have all the safety measures in place. 
• Construction materials: Construction materials hold great importance as well. If your business has updated HVAC, plumbing, and wiring, you will be charged a lesser amount. 
• Employees: The insurance cost depends on the number of employees as well. 

 

OK… But How Do I Choose an Insurance Company?

In 2019, there were 5965 registered insurance companies in the US. The number has unarguably grown in two years, which has made choosing an insurance company a lot more difficult than it previously was. 

Now that you know what type of insurance your hospitality business needs, here are a few things to keep in mind while making the final decision:

• Always look for a licensed company. Feel free to ask for certifications
• Go through their website and social media pages
• Sort through customer reviews
• Get three to four price quotes from different insurance companies
• Feel free to ask whatever you want—their customer service representatives should answer your questions efficiently

 

Final Thoughts

There are many problems that hotels and motels are exposed to, which can cause serious financial trouble. From your employee getting injured to your machinery breaking down, there are a million things that can go wrong. 

Here are a few more types of hotel and motel insurance in Connecticut that you should look into: 

• Commercial auto liability insurance
• Cyber liability insurance 
• Errors & omissions insurance
• Premises pollution liability insurance
• Unemployment insurance
• Employment liability insurance