Lodging businesses typically have substantial investments in their real property and furnishings. Smoking by guests and other hazards put the property at risk. The nature of the business, as one catering to the general public, creates the risk a guest or visitor will file a lawsuit claiming you are responsible for an injury. Given the risks, both property and liability insurance can be critical to the long-term success of the business.

The most cost effective and efficient way to obtain property and liability insurance coverage for your lodging business will usually be with a Businessowners Policy (BOP). Some insurers have tailored policies specifically to the insurance needs of smaller lodging businesses. Though marketed under many names, these policies typically have provisions similar to the property insurance and liability insurance sections of the BOP.

Property Insurance

Your package policy will cover your owned real estate, the furnishings and the equipment necessary to conduct your business.

There are several optional coverages you may wish to add to your property insurance, such as for:

• Outdoor signs not attached to your building
• Trees, shrubs and other outdoor landscaping that can be costly to replace
• Glass breakage

Your agent can help you decide what other property coverages you may need.

Liability Insurance

In the event of a lawsuit by a guest or visitor, your liability insurance pays for legal defense and any damages for which you may be liable, up to the policy limit.

An additional coverage that most lodging establishments find essential is Innkeeper's Liability Insurance. This covers property belonging to guests while it is on the insured's premises and in the insured's possession. Up to the policy limit, this insurance pays any sums your business is legally obligated to pay as damages because of loss of, or damage to, a guest's property.

If you have a restaurant or bar, you should have a liquor liability policy to protect you from a lawsuit charging that you served or sold liquor to an intoxicated person who was subsequently involved in an accident. Click here for more information about insurance for food service businesses.

You may want to purchase an umbrella liability policy to increase your liability limits.

Business Vehicle Insurance

Your personal auto policy probably provides coverage for some business use of your vehicle. A personal auto policy is unlikely to provide coverage, however, if the vehicle in question is used primarily in business. It will not provide coverage for any vehicle owned by a business. For those vehicles you must have a business auto policy.

Should you be driving your personal auto for a business purpose and get into an accident for which you are liable, an injured person could sue you personally. Will your personal auto policy have enough coverage to pay all the damages? If not, a lawsuit may be filed against your business. If you use personal vehicles for business, you want to be sure you have high enough limits to protect your business. You should discuss this with your insurance agent.

Workers Compensation Insurance

States have varying rules about when an employer must provide workers compensation insurance. If you have three or more employees, you should check with your state department of workers compensation to see if you are required to provide workers comp insurance.