What Should Hotel Insurance Cover?
There is plenty of room for things to go wrong in hotels. That’s why they need broad and comprehensive insurance policies that can cover them, whether there’s a fire in the kitchen or a slip at the pool.
Here is a list of the coverages that many hotels need:
- General liability: A basic GL policy helps cover claims associated with everyday business activities such as guests falling on premises, damage to guest property, restaurant operations, and accidents related to recreational activities.
- Property: General property insurance covers the hotel business property, protecting the physical buildings and structures from covered perils.
- Liquor liability: A specific liability policy designed to shield hotels from the cost of being held liable for incidents resulting from serving alcohol.
- Commercial umbrella: A policy that gives hotels additional liability coverage so they can maintain coverage limits beyond what is available on their primary GL.
- Commercial auto: A comprehensive policy that covers commercial vehicles if they’re involved in an accident, vandalized, or stolen. It also includes auto liability coverage for costs related to property damage or injuries caused by a crash.
- Garagekeepers: A policy that covers cars parked by the hotel’s valet service.
- Cyber liability: A policy designed to cover the costs associated with cybercrime and data breaches.
Distinguished’s Hotel Primary Insurance provides convenient one stop service for multiple coverages. It includes general liability, liquor liability, and property coverage available on a case-by-case basis.
You can add on high-limit hotel umbrella insurance (limits up to $145 million) and cyber liability so your clients get the comprehensive hotel insurance coverage they need. Still have doubts? Our umbrella policies backstop over 20% of hotel rooms in the country — it’s hard to go wrong with a resume like that.
Distinguished also offers an Express Hotel Umbrella policy designed for well-maintained midscale and select-service hotels. With limits up to $105 million and a streamlined online submission process, it’s a fast, flexible solution for qualifying risks.
Want to learn more? Register your agency or chat with one of our insurance experts to find out more.
Why Hotels Can’t Afford to Be Underinsured
It’s tempting for hotels to choose the cheapest insurance option—but focusing solely on price can be a costly mistake. With so much that can go wrong on their premises, hotels must ensure they’re properly covered and not underinsured.
Here are five reasons to help convince your clients that they’d rather be safe than sorry.
1. Slips and Falls
Swimming pools and spas are a major selling point for hotels, but they’re also hotspots for accidents, injuries, and lawsuits. Slippery pool decks, improperly maintained hot tubs, and even a lack of clear safety signage can turn a relaxing amenity into a legal nightmare.
Even industry giants aren’t immune. In 2022, Disney faced a $100,000 lawsuit after a woman claimed she suffered permanent injuries while using one of their pools.
And pools aren’t the only slipping hazard. Wet floors in a freshly cleaned lobby, icy sidewalks, or slick bathroom tiles can all lead to unexpected and costly incidents on hotel property.
2. Legionella
Hotels rely on complex water systems to provide guests with hot showers, heated pools, and spa facilities. When those systems aren’t properly maintained, they can become a breeding ground for Legionella bacteria. If someone inhales droplets from these contaminated water sources, the resulting pneumonia can be incredibly severe — and even fatal — for hotel guests.
For instance, in January 2024, a luxury New Hampshire resort made headlines when one guest died and another was hospitalized after contracting Legionnaires’ disease during their stay. This kind of outbreak is not only a serious health threat to guests but also a legal, financial, and reputational crisis for hotels, leading to lawsuits, regulatory scrutiny, and lost business, all while lives are impacted in devastating ways.
3. Fire Damage
With hundreds of guests and staff moving through a hotel every day, a single mistake can escalate into a disaster. One of the most common and costly risks? Fire damage.
Imagine a guest uses a faulty phone charger in a room unattended or someone forgets to turn off the clothes iron before rushing to a business meeting. These mistakes could ignite a fire that spreads through multiple rooms. In one case, a single misplaced cigarette resulted in over $250,000 in damages, requiring extensive repairs and temporary closures that cost the hotel even more in lost revenue.
Beyond direct damage, smoke can cause long-term harm — it ruins furniture, carpeting, and ventilation systems. Even a small fire can trigger sprinklers, leading to water damage that compounds the costs. That’s why comprehensive hotel insurance is essential — not just to cover fire-related repairs but also to handle business interruption losses, guest relocation costs, and liability claims if guests or employees are harmed.
4. Water Damage
Hotels rely on running water 24/7. When something goes wrong, the consequences can be catastrophic. Whether it’s a burst pipe, a malfunctioning sprinkler system, or an overflowing bathtub, water damage spreads fast — soaking walls, ceilings, electrical systems, and everything in between.
One real-world example? A Texas hotel was intentionally flooded by a criminal who had holed up in a room to hide from the police. The result was around $3 million in damages.
Slow leaks can wreak havoc. A hidden pipe issue behind a wall can go unnoticed for months, leading to mold infestations, weakened foundations, and air quality hazards, all of which can drive up repair costs and create liability concerns.
5. Robbery and Assaults
Hotels are meant to be safe havens for travelers, but like any public space, they can also be targets for violent crime. From armed robberies in lobbies to assaults inside guest rooms, these incidents pose serious risks to both guests and hotel staff.
For instance, in March 2023, a 31-year-old woman was brutally attacked and killed inside her Washington, DC hotel room — just an hour after checking in.
Crimes like this don’t just impact individuals. They also create a ripple effect that can haunt a hotel long after the initial incident. When guests no longer feel safe, bookings decline, and a once-thriving business can struggle to recover.
While hotels can take steps to improve security, when violent crime occurs on their property, they may still face lawsuits, liability claims, and reputational damage. The right insurance coverage helps protect against legal expenses and settlements, ensuring that a single tragic event doesn’t put a hotel’s future at risk.
How Much Does Hotel Insurance Cost?
For something as wide and varied as hotel insurance, there isn’t an average price point to quote your clients. But this won’t stop them from asking. It’s always helpful to give them some kind of answer before you can get an actual quote reflecting their specific circumstances.
While you can’t give them a precise number upfront, you can offer a rough estimate based on historical data. CBRE projected that hotel insurance would cost about 1.7% of operating revenue in 2023. More recently, a 2024 CoStar study reported that the average cost of hotel insurance in the U.S. was $683 per available room.
Keep in mind that these figures are just averages. The actual cost will depend on several factors, such as the hotel’s location, size, and operations. To get a precise number, it’s best to submit the business and request a tailored quote.
Explaining the Costs of Hotel Insurance
The above section can give your clients an idea of what their premiums might look like, but it doesn’t explain why. The following is an overview of the costs behind each coverage type and some of the factors that go into the cost of hotel insurance.
General Liability
The premium for general liability insurance (GL) is driven by several factors, including class code, size (revenue or number of rooms), number of stories, amenities offered, and loss history. Distinguished Programs utilizes a rating system driven by the number of hotel rooms, which provides a good measure of the hotel’s exposure.
A property with a significant loss history will also see higher GL premiums. Underwriters will look at the hotel’s loss experience and its risk management practices and protocols. Better-managed risks allow underwriters to offer a more favorable premium because these hotels are actively demonstrating they are managing their properties well.
Commercial Umbrella
As with the general liability policy, the cost of hotel umbrella insurance is rated based on the number of hotel rooms. An underwriter will also look at the hotel’s loss experience, amenities for ancillary exposures, auto exposure (including the number of scheduled vehicles on the commercial auto policy), and the pricing of the underlying general liability policy.
Commercial Auto
The types of vehicles and how they’re used drive commercial auto insurance rates. It costs more to insure vehicles that transport guests to and from the hotel’s amenities or the airport than it does to cover standard service vehicles. Passenger transport is a large liability exposure for hotels.
Garagekeepers
Garagekeepers insurance is needed if the hotel provides valet parking. Underwriters will look at the hotel’s best practices for hiring drivers, including whether MVR background checks are conducted and the type of driver training offered when assessing risk.
Property
As with any building, construction type (building materials such as wood frame, brick, steel, or stone), age of the building, occupancy, and protection all factor into the price of property coverage for hotels.
Safety features, such as proximity to a fire station, fire protection, and safety and security protocols, are also considered when determining premiums. Amenities need to be considered as well. Restaurants are a big fire exposure for hotels. Therefore, it’s important to understand the operation’s safety practices when it comes to cooking appliances, equipment maintenance, and grease handling.
Cyber Liability
The price of cyber insurance premiums is largely determined by the size of the hotel property. The larger the hotel, the greater its exposure and the higher the premium. More employees and guests increase the potential for breaches and other cyber vulnerabilities.
This includes access to point-of-sale (POS) systems, public Wi-Fi networks, mobile-enabled key cards, and third-party data-sharing networks like online travel agents (OTAs).
Get Hotel Insurance From Distinguished
Distinguished’s specialized insurance is designed for hotels, offering comprehensive protection, seamless coverage, and the convenience of working with an experienced partner.
With Distinguished’s Hotel Primary Insurance, your clients get the following coverages:
- General Liability
- Liquor Liability
- Property coverage (available for some accounts)
- Broad Form Named Insured coverage
- Crisis Response
- Fungi or Bacteria limited exclusion
- HNO/Owned Autos & Garagekeepers coverage
- Innkeepers (up to $1M limit of Liability; sublimit on guest’s cash to $25,000)
- Catastrophic Management coverage
Beyond our coverages, when you partner with Distinguished, you’ll also get:
- Broad coverage: Hotel Primary Insurance includes general liability, liquor liability, and auto liability, with property coverage available for select risks. Plus, our Hotel Umbrella and Express Hotel Umbrella policies provide additional protection at the limits your clients are looking for.
- Industry-leading expertise: With decades of experience in hotel insurance, Distinguished helps brokers navigate complex risks from submission to claims.
- Dedicated claims service: Brokers and clients rely on Distinguished’s responsive claims management, ensuring fast, reliable support when it matters most.
- Convenience: A streamlined underwriting and claims process makes managing policies simple and efficient.
Learn More About Distinguished’s Hotel Insurance
Hotels are big business for insurance companies and require a lot of expertise and knowledge. If you have questions about the particulars of Distinguished’s hotel insurance offerings, please reach out to our team so we can clarify how we can help you get your clients the best possible insurance program for their hotel or resort.
If you’re interested in taking the next steps with Distinguished, you can register your agency here or explore our insurance policies on our hotel programs page.
