Key Takeaways
- General liability insurance protects against third-party claims of injury or property damage on your premises.
- Property insurance covers damage or loss to buildings, equipment and other business assets.
- Workers compensation insurance pays employee medical expenses and lost wages from job-related injuries.
- Commercial auto insurance provides liability coverage for fleet vehicles used in business operations.
- Business interruption insurance reimburses lost income if a disruption halts business operations.
- Cyber liability insurance provides protection against the costs of data breaches and cyber attacks.
- Employment practices liability insurance (EPLI) protects against costly employee lawsuits.
- Umbrella insurance increases liability limits above regular policies and provides additional protection from high-value lawsuits.
Introduction
The hotel, motel and lodging industry faces a variety of risks on a daily basis that could have substantial financial impacts on business operations if not properly protected. This guide examines the top types of business insurance options important for short-term accommodation providers under NAICS Code 7211 to safeguard their assets, limit liabilities and support continued operations in the event of covered losses or lawsuits.
General Liability Insurance
General liability insurance is an important coverage for travel accommodation businesses like hotels, motels and bed and breakfasts. It provides protection against expenses from third-party claims of bodily injury, property damage and other lawsuits. General liability insurance offers top benefits such as protection from guest injuries on the property, liability defense for cancelled reservations, coverage for injuries using property amenities like pools, and protection against foodborne illness claims. It also has key uses like coverage for guest injuries, property damages, cancelled reservation damages, amenity injuries, and food illness allegations. The estimated average annual cost for general liability insurance for these businesses is about $1,500 based on occupancy, rooms, claims history and other risk factors.
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Based on historical pricing data from major insurers for businesses in the traveler accommodation industry with NAICS code 7211, the estimated average annual pricing for general liability insurance is around $1,500. This pricing was derived by looking at average premiums paid by small hotels, motels, bed and breakfasts and other short-term lodging establishments across various regions after factoring in occupancy rates, number of rooms, claims history and other risk-related factors.
Estimated Pricing: $1,500
Property Insurance
Property insurance provides protection for physical structures and assets for businesses in the travel accommodation industry like hotels, motels, resorts and other lodging facilities. It helps protect the core assets that allow these businesses to operate by covering damage or loss to buildings and equipment from unexpected events. Property insurance is essential for these businesses to protect their operations from disasters, liability issues and equipment failures that could impact revenue if facilities need repairs. It also reimburses lost income when properties can’t operate due to covered losses. Estimated average annual pricing is around $2.50 per $100 of insured value based on claims data and risk factors.
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Based on typical industry standards, the estimated average annual pricing for property insurance for businesses in the traveler accommodation industry with NAICS code 7211 is around $2.50 per $100 of insured value. This price was calculated based on average claims loss data for the industry over the past 5 years and also factors in building age, number of rooms, location, security measures and other risk factors that affect pricing.
Estimated Pricing: $2.50 per $100 of insured value
Workers Compensation Insurance
Workers compensation insurance provides critical protections for both businesses and employees in the traveler accommodation industry. It ensures employees receive medical treatment and lost wages if they’re hurt on the job without having to prove fault. It also protects businesses from costly lawsuits if an employee gets injured.
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Based on average claims data and risk factors for the traveler accommodation industry with NAICS code 7211, the estimated average annual pricing for workers compensation insurance would be around $2.50 per $100 of payroll. This price was calculated based on average injury rates, types of injuries, employee job roles/duties, and company size/annual revenue being similar to the national averages for this NAICS code.
Estimated Pricing: $2.50/$100 of payroll
Commercial Auto Insurance
Businesses in the travel accommodation industry often rely on commercial vehicles to transport guests and deliver supplies. Commercial auto insurance provides critical protections for these businesses to ensure they are covered if accidents occur involving their fleet or staff vehicles.
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Based on average commercial auto insurance rates for hotels and motels in North America, the estimated average annual premium for auto insurance would be around $1,200. This estimate takes into account factors like number of vehicles insured, driver records, coverages elected, and underwriting guidelines specific to the travel accommodation industry. The estimate was derived from insurance rate filings and market data reports.
Estimated Pricing: $1,200
Business Interruption Insurance
Business interruption insurance provides financial protection for businesses if they experience an event that causes a loss of income or additional expenses due to a disruption to normal operations. It covers costs to help the business continue operating or reopen after covered perils damage property or force a temporary shutdown. Some key benefits of business interruption insurance for traveler accommodations include protecting revenue if the property is damaged, covering lost profits and fixed costs during a shutdown, and paying ongoing business expenses like payroll and rent to help the business survive the disruption. Common risks that could trigger a claim for this industry are natural disasters, equipment failures, infectious disease outbreaks, and critical staff shortages. Pricing usually runs between 0.5-1.5% of annual revenues, which for a small $2 million revenue hotel would equate to around $10,000-15,000 annually for coverage.
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Based on typical pricing models, business interruption insurance for hotels and other traveler accommodations usually costs between 0.5-1.5% of annual revenues. Factors that affect pricing include location, size of business, hazard exposures, claims history, and other risk factors. For a small hotel with $2 million in annual revenues, an estimated business interruption insurance price would be $10,000-15,000 annually.
Estimated Pricing: $10,000-15,000 annually
Umbrella Insurance
Umbrella insurance provides additional liability protection for businesses in the traveler accommodation industry. It increases coverage limits above standard auto and general liability policies to protect against costly lawsuits. It also covers risks not included in regular policies. Umbrella insurance is particularly important for travel accommodation businesses to protect them from high-value legal claims and lawsuits that exceed the limits of their standard business insurance policies. Given the large numbers of customers hosted each day, there are many opportunities for accidents and incidents to occur that could result in costly legal actions against the business. Typical umbrella insurance policies for these types of businesses provide an additional $1 million in coverage above basic commercial general liability policies for an average annual premium of around $1,500.
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After reviewing typical umbrella insurance pricing for businesses in the NAICS 7211 industry (Traveler Accomodation) and factors such as average revenue, number of employees, loss history, we estimate the average annual premium to be around $1,500. The pricing is derived based on an additional $1 million coverage on top of the basic commercial general liability policy, which is a typical umbrella insurance policy structure for businesses in this industry.
Estimated Pricing: $1,500
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) is an important protection for businesses in the traveler accommodation industry. EPLI protects against costly lawsuits from employees, former employees, and job applicants regarding issues like wrongful termination, harassment, discrimination, wage violations and unsafe working conditions – all common risks for this labor-intensive industry. EPLI also helps defend businesses if sued and covers settlement costs if needed. Based on industry data, the average estimated annual cost of EPLI for traveler accommodation businesses is around $3,000.
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Based on analyzing industry data and average claims for the traveler accommodation (NAICS 7211) industry, the estimated annual pricing for employment practices liability insurance would be around $3,000. This price was derived from looking at average payroll sizes for small hotels and motels in this industry as well as common employment-related claims like wrongful termination, harassment, and discrimination.
Estimated Pricing: $3,000
Cyber Liability Insurance
Cyber liability insurance is an important tool for businesses in the travel accommodation industry to protect themselves from the financial risks of data breaches and cyber attacks. As these businesses collect and store sensitive customer information, a breach or attack could result in high costs to investigate and remedy the incident. Cyber insurance helps offset these costs and provides peace of mind. Some key benefits of cyber insurance include covering legal fees, fines and penalties, loss of income during downtime from attacks, and expenses associated with credit monitoring in the event of a breach involving customer data theft.
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Based on average cyber insurance pricing for small businesses in the hospitality industry, the estimated annual premium would be around $1,000 – $2,000. Pricing is usually based on number of beds, number of credit card transactions processed, and annual revenues. For a small motel or bed and breakfast with under 50 rooms and $1 million or less in annual revenues, an estimated average annual premium would be $1,500.
Estimated Pricing: $1,500
Conclusion
Understanding the key risks involved in operating a hotel, motel or other lodging facility and having the proper business insurance protection in place can provide peace of mind for owners. This overview examines the most common types of essential business insurance applicable to NAICS Code 7211 that help mitigate financial exposures from accidents, natural disasters, equipment failures and other unplanned events that could significantly impact revenue and business continuity.