Hotel Property Insurance: 4 Reasons a Hotel Needs It

Murphy’s Law states that anything that can go wrong will go wrong. Perhaps nowhere is this more apt than in the hotel industry. Whether it’s a freak weather event, an accident, or criminal activity, a hotel property is always at risk of something going awry.

Hoteliers should prepare for worst-case scenarios and surprise damage bills by having a good hotel property insurance policy. Hotel property insurance provides coverage in case of damage to the physical structure of the hotel building. If high waters flood the lobby or a driver crashes through a wall, hotel property insurance helps the hotel get money right away, so everything is ready for the next guest’s perfect stay.

This article outlines the kinds of threats that hotel property insurance covers and discusses steps hotels can take to minimize potential damages. This way, hotel owners have all the facts they need to sleep soundly at night, knowing their hotel is ready for anything. 

1. Fires

According to FEMA, fires damage nearly 4,000 hotels and motels a year, causing around $100 million of property damage. Most of these are caused by accidents in the kitchen, but fires can also break out from lit cigarettes, faulty wiring, or lightning strikes.

In February 2022, the Bluenose Inn in Bar Harbor, Maine, was partially burnt down in an electrical fire. The fire destroyed the hotel’s annex and led to around $10 million in damages. 

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Hotel property insurance helps hotels get back on their feet when fires put them temporarily out of business. That way, they don’t miss out on additional lost revenue. 

2. Vandals

Hotels stand apart from the competition by having better amenities that draw guests eager to lie by the pool or play a round of golf. However, these amenities are also significant draws for vandals. Outdoor attractions and amenities are nice, but they’re harder to secure, which makes them a source of risk for hotel owners. Damages to these assets can cost a lot of money to fix and deter guests from staying.

For instance, the Trump National Golf Club in New Jersey had one of its greens ruined by vandals who did donuts across the delicate grass. The holes had to be closed and repaired before golfers could get back to a full 18. 

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Many hotel insurance policies don’t cover specialty amenities like golf greens. With Distinguished’s Hotel Primary Insurance, golf courses and greens can be added coverage as part of the hotel’s property insurance policy. 

3. Storms

Storms are a major threat to buildings across the U.S., and hotels are no exception. High winds and rain can damage hotel property and leave hotel owners with a massive cleanup bill and a hurricane-sized migraine. 

Sometimes, the damage is minor — a couple of broken windows or damage to the grounds. But, sometimes, a storm tears the building’s roof off. That’s exactly what happened to a DoubleTree hotel in North Carolina in 2022. 

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It’s important to make sure that your hotel property insurance coverage covers storm damage. Depending on your area and policy, storm damages may not be covered or must be added as additional coverage. This way, you know that the hotel is covered even if all you’ve got left are four walls with no roof in sight. 

4. Power Outages

Power outages are inconvenient for sure, but do they cause property damage? Not in the traditional sense, but when the power goes out, it can also knock out refrigeration, and with that can go all the perishable food stored on-premise. If the hotel is running a fine-dining restaurant, this could mean thousands of dollars in potential losses.

For instance, many hotels went without power during the winter storm in Texas in 2021, which caused widespread power outages. These power outages made it impossible for hotels to open their kitchens, leading to food spoilage.

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Check whether potential hotel insurance policies offer food contamination or spoilage coverage when reviewing them. Both of these policy features come with Distinguished’s Hotel Primary insurance offering. 

How to Make Sure a Hotel Property Is Protected

Protecting hotel property is all about being prepared. Here are three ways hotels can get ready to minimize any potential damages.

1. Get Comprehensive Hotel Insurance Policies

Not all hotel insurance policies are created equal. Take a close look at what is covered and how much it costs for that level of coverage.

No insurance policy is complete without these coverages:

Without these coverages, a hotel could be at financial risk of not being able to recover in the event of a bad accident. 

Learn more about hotel insurance costs and coverages

2. Do Regular Inspections and Maintenance

Most hotels come equipped with all kinds of safety features and equipment, like fire escapes, sprinklers, and first-aid kits. All of these items need regular inspection and maintenance to make sure that they are in working order. 

Regular inspections should include:

  • Checking the smoke detectors across the hotel
  • Inspecting wiring and plumbing to avoid fires or water leakage
  • Updating computer security systems to lock out hackers

Not only will doing these inspections make it less likely that you’ll need to file insurance claims, but it also ensures that a filed claim isn’t denied because of negligence. 

3. Be Proactive Hotel Owners

Hotel owners should keep up current safety measures and look for new opportunities to increase safety where they can. These updates come in the form of improved staff training, so they know how to react in a situation like a fire to maximize safety and minimize damages.

Other ways hotel owners should proactively protect their property are:

  • Implement security systems, like physical barriers or cameras, to deter vandals
  • Provide special trash cans for cigarettes
  • Install backup power systems in case of power outages

No matter how prepared a hotel is, there’s no way to reduce risk completely. That’s why hotels need comprehensive insurance — to cover them in case they do everything right and still face damages and bills.

Get Hotel Property Insurance Coverage with Distinguished

Distinguished offers hotel property insurance as a part of our Hotel Primary Insurance program. This insurance is perfect for all kinds of hotels and resorts, from small boutique offerings to large resorts. Learn more about key coverages and eligibility

For more information about our Hotel Primary program, please contact your sales executive or begin the brokerage signup process


About Distinguished Programs
Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.
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