Boutique Hotel Insurance: The Coverages Clients Need

After coming for diamonds and J. Crew, millennials are now looking to shake up another industry — hotels. Millennials want authentic, local experiences best found in independent or boutique hotels. Due to demand, this hotel industry segment is growing fast, doubling its market size between 2013 and 2019 before taking a hit in 2020. 
 
For insurance brokers, this means you’re far more likely to see new boutique hotel clients walk through the door than ten years ago. It also means that you need to rethink how you sell boutique hotel insurance because the people buying may need different coverages than chain hotels. This guide will introduce you to what boutique hotels are, their insurance needs, and how Distinguished can help you make the sale every time.  

What is a Boutique Hotel? 

Boutique hotels are upscale hotels that specialize in providing unique experiences with a refined aesthetic and superior customer service. Boutique hotels are also independent, meaning that they’re small businesses that often run on tighter budgets.  
 
All kinds of people run these hotels— from young people in urban centers to older people in the country. However, not all of these owners are insurance experts. They might have a general idea of what policies hotels need but will be looking for brokers to advise them on how to get the best coverage possible. 
 
What does this mean for brokers? It means you need to throw out the playbook you typically use for selling hotel insurance because it probably won’t work. Boutique hotels and hotel owners are all unique, and brokers will need to bring a tailored approach to each new prospective client. Narrow insurance policies with coverages built for chain hotels won’t work well here.  

What Basic Coverages Do Boutique Hotels Need? 

Like all hotels, boutique hotels need multiple insurance coverages to keep them financially secure. Everything from the pool to the parking lot can be potential sources of lawsuits, while damage and theft are an ever-present threat hoteliers will need to handle. Below are five must-have coverages for every boutique hotel.  

General Liability 

No secrets here — if you’ve got a business, you need GL. A General Liability policy protects your clients from liability suits that come from things like slips by the pool or food poisoning from an on-site restaurant. 

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Even the most diligent hotel owners need a good GL policy because frivolous or ridiculous lawsuits can often happen in the hotel industry. For example, in a 2009 suit, a Polish woman sued an Egyptian hotel because their pool allegedly caused her daughter’s pregnancy. It may sound ridiculous, but something equally as absurd could happen anywhere, and your client needs good GL coverage in place, just in case it happens to them. 

Commercial Property 

Commercial property coverage protects the hotel business property if the property itself is damaged or stolen. This can include hotel property being damaged by floods, fires, guests, or theft of hotel property. 

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One example of an all-too-common scenario is fire damage caused by guests. In 2021, a hotel room was trashed after a couple burned furniture, and drug paraphernalia was found in their room. Commercial property insurance would help cover the costs of refurbishing the room so it can get back to accepting guests ASAP. 

Liquor Liability 

Bars can be a great source of revenue for cash-strapped boutique hotels, but they also open them up to lawsuits stemming from overserved guests.

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In 2015, a Beverly Hills hotel was sued after they served alcohol to two guests who later that day killed a man while drunk driving. Liquor liability coverage would help mitigate potential legal fees and settlements for this case.

HNO/Owned Autos & Garagekeepers Coverage 

Many hotels either use vehicles for business errands or allow guests to park on the premises. HNO/Owned auto provides liability coverage for hired or borrowed vehicles that are used for work purposes such as rentals and an employee’s car. Garagekeepers coverage covers any damage to guest-owned vehicles while they’re in the care of the hotel. 

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An example where these policies would help boutique hotels is theft. Recently, there’s been an outbreak of catalytic converter thefts across America, including in hotels. Thieves break into parking lots and then steal the catalytic converters to sell for their precious metals. In this case, garagekeepers coverage would help pay for the damages, helping assuage what would be a very angry customer. 

Cyber Liability 

21st-century problems require 21st-century insurance solutions — and for hotels, that means cyber liability insurance. Hackers recognize that hotels have access to thousands of guests’ information, including personal info, contact details, and even credit card numbers.

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Cyber liability coverage covers the costs of dealing with a breach and any arising lawsuits. It also helps your client by providing an expert team that can help them contain the data breach and limit any damages to the insured’s hotel. Learn more on Distinguished’s Cyber Liability program page.  

The Benefits of Distinguished Boutique Hotel Insurance 

Distinguished has been a leader in hotel insurance solutions longer than anyone in the U.S. Not only are we knowledgeable, but we’re also ready to provide your clients with better service and exactly the amount of coverage they need for their boutique hotel. 
 
Here are three ways Distinguished can help you sell more hotel insurance and keep your clients happy.  

Underwriting Expertise and Broad Coverages 

Our Hotel Insurance program is the longest-running in the country and has helped countless hotels get the coverage they need. We can offer that experience to you when underwriting an insurance policy or walking you through claims, so you and your client get the best possible hotel insurance experience.  
 
Our Hotel Primary Insurance is comprehensive, offering your clients GL, commercial property, liquor liability, auto liability, and garagekeepers coverage.  

Some key coverages include: 

  • No exclusion for legionella 
  • Broad form name insured coverage  
  • Outdoor trees, shrubs, and plants 
  • Food contamination 
  • Innkeepers liability 
  • Business income (ingress and egress) 

Learn more about what our hotel program covers by talking to one of our insurance experts or looking at our hotel program page.  

High Limit Umbrella Policies 

High-limit hotel umbrella insurance policies are critical in today’s highly litigious environment (no wonder 1 in 5 of the nation’s hotel rooms currently are covered by one of our policies).  . An umbrella policy from Distinguished can offer insureds up to $170 million in limits over their primary coverage.  

Crisis Response Services 

Hotel reputations are just as important as anything else being insured, even if they don’t show up on the balance sheet. With this in mind, Distinguished offers Crisis Response Services to help insured hotels in the event of a crisis.  
 
So, if the insured’s boutique hotel falls victim to anything like a shooting, fire, or murder, Crisis Response Services can be called in to provide expertise and funds to minimize risks and damages to the hotel. This includes helping the hotel secure the scene, paying for funerals, and offering lodging to any people affected.  
 
Hopefully, the insured’s hotel will never need to use these services. However, our goal is to be there for your clients if the unexpected happens. 

Sign Up Today 

If you want to take the next step with Distinguished so you can offer your clients our hotel insurance program, you can start by registering your agency. If you’re already registered, download and fill out our hospitality insurance application form to get a quote for your client today. 

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