Insuring Your Inn: What Kind of Policy is Best for You?

by Andi Silver, Markel Insurance Company

Innkeepers have many important business decisions to make. One of the most important of these decisions is insurance. What kind of policy is right for you? What coverage do you need? Is your current coverage adequate? How do you find the best coverage for the best price?

You might be tempted to buy a homeowners policy to protect your B&B or inn, especially if it has only a few rooms and also happens to be your home. However, a homeowners’ policy generally won’t protect you if:

• A guest falls down your stairs, breaks an ankle, and sues you for negligence.
• Your business property is damaged.
• You lose income because you have to close your inn for three weeks to make repairs.
• Wedding guests become ill after eating food you prepared.

Coverage Central

Commercial insurance policies offer more comprehensive protection than the typical homeowners’ policy. There are two main parts to a commercial policy: property and liability. Property coverage protects your building, its contents, and your phone and computer systems. Liability coverage protects you if you’re sued, by providing lawyers to defend you in court, paying your defense fees, and paying the settlement that a jury awards.

General liability (GL) is essential for any business. It protects you if someone claims your negligence caused their physical injury or damaged their property.

There are other types of insurance to consider, depending on your business needs:

• Commercial automobile covers the vehicles you use while conducting inn business.
• Special events insurance covers you if you host weddings, family reunions, and other events at your inn.
• Business income insurance protects you if you lose income because your B&B is temporarily out of operation due to a covered loss, like a fire.
• Products/completed operations insurance protects you if you do limited catering, or operate a gift shop or restaurant.
• Umbrella liability provides extra protection for catastrophic events. Umbrella liability goes into effect after you’ve exceeded the limits of your general or auto liability insurance.
• Flood insurance is an important coverage to consider if your inn is located in an area prone to flooding. Most standard, commercial policies will not cover you for flood-related water damage. You will need to buy a separate flood insurance policy to get the proper protection.

Finding an Agent

Another important step in the insurance process is finding a commercial insurance agent. Look for an agent who has experience insuring B&Bs and inns, can explain the various coverage options available to you, and can advise you on what’s right for your business. If you don’t have an agent, ask other B&B owners for a recommendation. As your B&B or inn evolves, your insurance needs may change, so choose an agent who can help you as your business grows.

Comparing Policies

Although the cost of insurance is often foremost in B&B owners’ minds, it should not be the only factor on which you base your purchasing decision. Before you buy an insurance policy, compare coverage, limits of liability, deductibles, exclusions, and other policy terms. Make sure you’re comparing apples to apples, and buy the policy that best protects you and your inn.

Another important consideration is the financial strength of the insurance company you choose. Look for a reputable firm that independent insurance analyst A.M. Best Company rates “A” or above. This means the company will have money in the bank to pay your covered claims, whether they occur this year or 10 years from now.

In Summary

Commercial insurance protects your property and assets, and pays to defend you if you are sued due to a covered loss. It also provides special coverage that is unavailable with a typical homeowners policy, such as special events liability. Your commercial insurance agent will be able to help you purchase the right protection for your B&B or inn.

Andi Silver is manager of the B&B insurance program at Markel Insurance Company in Richmond, Virginia. Markel specializes in insurance for B&Bs and country inns.
 

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