CBIZ INNKEEPERS INSURANCE BLOG

Insights and tips on how to protect your inn or bed & breakfast, giving you and your guests peace of mind.

Hayden Ward
/ Categories: BLOG Articles

How is Innkeepers Insurance Different from Homeowners Insurance?

What Insurance Do I Need For My Bed & Breakfast

One of the most common questions we get from customers who want to own a Bed & Breakfast is a very understandable one: “I have homeowners insurance, so do I need innkeeper insurance?” It’s a great question that identifies a need to clarify a misconception in the industry as a whole. In this article, we're talking about all things homeowners insurance and why it may not be the best protection plan for your Bed & Breakfast in the event something goes wrong during a guest's stay.

What is Homeowners Insurance?

First things first: what is homeowners insurance exactly? Homeowners insurance is designed to protect homeowners from the risk of loss to their residences from unforeseen events. For example, if a tree in your front yard falls on your garage during a thunderstorm or if your roof is damaged during a tornado, your homeowners coverage may pay for the necessary repairs.

Homeowners insurance also contains a personal liability component, which protects you and your family from third-party liability claims such as bodily injury or property damage.

We've laid out the main reasons why your homeowners insurance policy may not provide the right coverage for your Bed & Breakfast that innkeepers insurance will when you're occupied with guests.

#1. Running an Inn Requires Commercial Coverage

When you list your Bed & Breakfast property online and money changes hands, you’re engaging in a business activity, and the stakes go up. Property owners face risks associated with property damage, liability, and lost income that homeowners’ policies typically don’t address.

A standard homeowners insurance policy will not be able to help with employees’ compensation, liquor … all the things you need for your inn to run at ease. Nor will it protect you in the event a guest has an injury on your property. Most importantly, you’ll quickly discover that your homeowners policy typically excludes losses related to business operations. The only type of business covered by a homeowner’s policy is a business whose primary operation is not at the residence, such as a contractor who has a home office.

#2. Homeowners Insurance Typically Doesn’t Cover Business-Related Property Damage

Here’s the long and short of it: homeowners insurance isn’t designed to cover Inns. That being said, one of the unique risks you face with a Bed & Breakfast is guest-related property damage. Typically, your homeowners policy won’t cover damage caused by guests, which means that should a guest damage your property, you’ll have to foot the bill to repair or replace it.

At any time, a guest could break a lamp, soil a mattress or accidentally hang their clothes on a sprinkler head causing it to go off and a major incident. Guest-related property damage is something not to be taken lightly, especially in the hospitality industry.

#3. Commercial Liability is Different than Personal Liability

Like we mentioned above, most homeowners insurance policies come with personal liability coverage, which should protect you if a third party is injured on your property or causes damage to your Inn.

While commercial general liability and personal liability have similarities, your need for them changes depending on how you’re using your property. And that makes all the difference when it comes to insuring your Bed & Breakfast.

What is Personal Liability?

Personal liability coverage will protect you up to your policy limits from lawsuits related to third-party accidents and bodily injury incidents on your property as well as property damage.

Let’s say a friend comes over and their child trips on a broken step. If this person decides to sue you, they’re holding you personally accountable for their bodily harm that occurred while on your property. In that case, your homeowners policy, which most likely includes personal liability coverage, should protect you from your friend’s claim.

What is Commercial General Liability?

Commercial general liability, on the other hand, does indeed protect you from third-party claims related to injury, accident and property damage (as well as libel and slander) but specifically in regards to business operations. Once again, operating a Bed & Breakfast qualifies the property as a business, therefore requiring the need for commercial general liability coverage.

If a guest slips, falls and breaks their wrist on your driveway during their stay, your homeowners insurance (and the personal liability coverage within it) won’t be able to cover you should that guest send you a medical bill or take you to court…or both.

#4. Homeowners Coverage Can’t Protect Against Lost Income

Another major difference you’ll find in regards to homeowners coverage and commercial innkeepers insurance is loss of income coverage.

You got into this business to make money, but disaster can strike at any time. For example, if your property is badly damaged by a fire or vandalism and now you are now unable to host guests for months, you could lose a significant amount of money. Not only would your losses not be covered by homeowners insurance, but now you would be unable to make any extra income while you wait out repairs.

Fortunately, commercial coverage like that found in an innkeeper insurance policy has a lost income component built into the policy. That way, should your property become uninhabitable due to a covered loss and you’re facing months without revenue, you’ll be covered.

Homeowners Policies Typically Don't Cover Business Activities.

Outside of some limited exceptions, homeowners’ policies alone usually don’t provide the coverage you need to protect your Bed & Breakfast. Commercial innkeepers insurance, on the other hand, can cover property damage, liability claims, employee benefits liability, lost income and more.

With the CBIZ Innkeepers Insurance program, you’ll rest easy knowing that you have comprehensive coverage. Speak with one of our CBIZ Innkeepers Insurance experts today!

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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CBIZ Innkeepers Insurance, a division of CBIZ Insurance Services, Inc., is the largest insurer of innkeeper businesses in the United States. As part of an $850 million New York Stock Exchange traded company (CBZ), we developed a specific policy coverage to meet the needs for inns and bed & breakfasts, and the amenities offered by these businesses. Our policy is underwritten by an A.M. Best Rated A++ (Superior) company.

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