What you should know when choosing Hotel Insurance

This article was originally published on November 25, 2025.

Running a business in the hospitality industry comes with a long list of risks. You are catering to guests and committing to keeping them safe and happy on your premises. That's why the right hotel business insurance is essential. Getting hotel business insurance that covers your entire operations, is the first step toward protecting your brand’s reputation and financial future.

Who needs hotel business insurance?

It isn’t just large chains that require protection. This coverage applies to motels, bed and breakfasts, boutique inns, and resorts. Basically, if you provide overnight lodging and employ staff to maintain the premises, you face significant liability and property risks. Hotel business insurance ensures that hospitality businesses can operate with financial security.

As a hotel owner, you have to think about potential disasters for which your business could be held responsible. A guest could slip and fall by the pool, or a customer could have an allergic reaction to an ingredient in a dish at your restaurant. These risks can lead to damaging lawsuits for your hotel business.

How to evaluate your hotel’s insurance needs.

Before your hotel is ready for guests, you must have hotel insurance coverage in place. Keeping in mind the dangers of the industry, here are some things to think about in terms of hotel insurance coverage requirements:

1. Consider the physical location of your hotel. You should ask yourself some of the following questions. Does your business operate out of a building you own, or are you renting a space? Is your business in a location prone to natural disasters like wildfires or earthquakes?

2. Think about any extra amenities you offer. Does your hotel have a swimming pool or a bar on its premises? Do you use company-owned vehicles? The features that make your hotel stand out can also be the ones that hurt your business the most if not protected by hotel insurance.

3. How many employees does your business have? Does the work they do make them prone to injuries? How prepared are you to respond to accidents?

Why hotel insurance is necessary.

It’s reasonable to wonder, “Why do hotels need business insurance?” The answer is that in the hospitality industry, you are responsible for the safety of guests around the clock, leaving little margin for error. A single lawsuit from a pool accident or a kitchen fire could otherwise drain your reserves and force a permanent closure. Hotel insurance acts as a critical safety net, ensuring that an unfortunate incident remains a manageable hurdle rather than a business-ending disaster.

For independent hotel owners, boutique managers, and other stakeholders, hotel business insurance also serves the purposes of protecting their reputation. It assures guests and staff that their safety is paramount while protecting your unique property from the financial impact of incidents. Understanding these core coverages ensures you can recover quickly and maintain the operational continuity your brand relies on.

Here are the types of business insurance you should have for your hotel

Liquor Liability Coverage

A bar or other space that sells or serves alcohol can be an important source of revenue for your business. But it also comes with legal liabilities. Liquor Liability insurance is essential if you serve alcoholic beverages.

Guests who drink excessively can engage in unruly behavior even after they have left your premises. If a patron was “over-served,” leaves your bar, and gets into an accident on his way home, your business may be responsible for medical expenses for anyone affected. In addition, you may find yourself with significant legal fees.

Liability Insurance

Hotels, inns, bed and breakfasts, and motels are exposed to many types of liability. Your business is potentially responsible for bodily injuries sustained by your guests while on your property, as well as any damage to your property itself.

For example, having a swimming pool is attractive to potential visitors, but it may increase the risk of guest injuries and accidents on your premises. If a guest slips on the wet floor surrounding the pool and injures their back, your business can be liable and may have to pay large costs out of pocket if you don’t have adequate coverage. To better prepare for accidents like this in the future, you should consider hotel insurance programs that include liability insurance.

Commercial Property Insurance

Commercial property coverage for hotels aids hotel owners whose property may get damaged in case of disasters and accidents. By protecting the building and what is inside it, this coverage eases the repercussions from property damage, if a fire breaks out and destroys your outdoor patio for example. Property Insurance can help cover the cost of repairs.

Workers’ Compensation insurance

Most hotels have staff of some kind - whether it is concierge, housekeepers, chefs, or pool attendants. While exact laws may vary, most states require you to have Workers’ Compensation, a critical piece of hotel business insurance—if you have employees.

Hotel staff can be prone to a wide variety of injuries. Back strains from cleaning rooms or lifting heavy objects, burns and lacerations in the kitchen, and slip-and-fall accidents are just some of the employee injuries that hotel management deals with regularly. Having Workers’ Comp as part of your hotel business insurance coverage protects your business from having to pay for medical bills for these and other mishaps.

It is crucial to understand that failing to carry Workers’ Compensation insurance when required (which is virtually always) can come with significant consequences, including financial penalties.

Employment Practices Liability Insurance

As in any other industry, hotel workers can experience sexual harassment or discrimination by coworkers. If your business doesn’t have the right tools in place to deal with these complaints, they can result in employee lawsuits. Employment Practices Liability insurance (EPLI) is a type of hotel liability insurance that protects your business from charges of wrongful termination, harassment, and discrimination.

These coverages and much more are all included in a single THREE policy, providing hospitality businesses with the protection they need.

Factors that affect hotel insurance costs.

Insurance premiums vary based on specifics like your building’s age, location, and total replacement value. Providers also evaluate your annual revenue, payroll size, and the presence of high-risk amenities like swimming pools or bars.

For people like operations managers overseeing multiple locations, a purchase decision may be less about cost and more about a streamlined approach to complex liabilities. A comprehensive hotel insurance program ensures that every property meets rigorous industry standards and regulatory compliance, minimizing exposure across the organization. By clearly defining limits and exclusions, a robust policy simplifies decision-making and strengthens the organization’s resilience against widespread operational disruptions.

Determining your hotel insurance costs.

A policy from THREE is an excellent way to get outstanding protection for your entire business. What will your specific hotel insurance cost be? You can find out by getting a hotel insurance quote on our website. Or, if you prefer, our licensed business advisors are happy to assist you. They will get to know a little bit about your operation and then tell you how the various coverages in our policy can protect you and what you’ll pay.

Your hotel doesn't have to face those costs alone. It takes just minutes to get a quote and once your hotel is protected, you can have piece of mind knowing your business is protected from the high cost of liability claims, property damage, and more.

How to get hotel business insurance.

Getting the right business insurance for hotels is easier than you might think. You'll need basic details about your operations, such as your location, revenue, and employee count, to get a quote. With THREE, you can start your quote online and review the coverages in one policy.

THREE by Berkshire Hathaway is backed by the Berkshire Hathaway Insurance Group, rated A++ (Superior) by A.M. Best. We provide hands-on servicing from quote to claim and make it easy for policyholders to prove they have coverage. If you're a policyholder and need a Certificate of Insurance, you can request one 24/7 through My THREE Online.

For new hospitality entrepreneurs and investors, securing the right hotel insurance is a critical step in protecting your capital. It addresses the risks inherent in the industry, allowing you to launch with confidence. By protecting your new venture from early financial setbacks, proper coverage lays the groundwork for sustainable future growth.