If you take in paying guests then you need to know the cover on your insurance policy is adequate for your own requirements. A standard home insurance policy will not give you any cover if you’re operating a hospitality business from your premises.
Luckily we have lots of different solutions for those running a small B&B, a guest house, a larger boutique hotel, or those that market their rooms for AirBnB or self-catering accommodation.
Below we have compiled a list of covers under a guest house insurance policy, although sums insured and terms can vary on different policies, along with explaining policy jargon and things to look out for.
Covering The Property
Do you own your property or have you made any improvements to the property you lease?
This covers the main property, outbuildings, walls, gates and fences against the standard perils. You must insure your buildings for the ‘Full Rebuild’ cost should your property be totally destroyed. The rebuild should include costs for debris removal, architects and other related fees, plus the cost of reinstating the property to a ‘like for like’ state including materials and labour.
If you have a mortgage on your guest house, then quite often as part of that mortgage they will insist on the property being insured for a certain amount.
Although we can’t advise you on how much to insure for, we can provide advice on where you can go for help.
If you lease the guesthouse then normally the landlord will insure the buildings. However if you yourself have made any improvements to the building the improvements are not covered by the landlord and you may want to insure them on your guest house policy. Improvements could include partitions, fixed wood flooring, fitted bars or kitchen units, wallpaper etc.
Insuring Your Contents
Covering your contents and stock is a vital cover on a guest house policy. Contents cover is usually broken down in to different sections. We’ve listed and described some of these sections below.
Covers all contents which guests will have access to or which will be used in conjunction with your business, e.g. guest bedroom furniture, carpets, cooking equipment, dining area tables and chairs, etc.
This section often excludes your own personal contents and needs to be insured under a ‘personal contents’ section. Check any quote to ensure all your contents are fully covered.
If your guest house is owner occupied which most are then you’ll likely have your own private quarters. It’s advisable to include cover for your own personal contents and valuables, like furniture, clothing, jewellery, electrical goods etc, against the standard perils.
It’s often a separate section to your business contents, although some insurers will put business and personal contents under the same section and is what we try to recommend as it avoids you having to work out what exactly is deemed as business contents and whats personal.
Your personal contents can be insured within the guest house under the Personal Contents section, but what if you want to include cover for contents whilst taken outside of the home.
If you want things covered like jewellery, mobile phones or tablets, cameras, sports equipment, glasses, hearing aids, etc, for loss or damage whilst out for the day or maybe a short break away, then you would need to add this as an optional extra. Many guest house policies however don’t offer this extension.
Usually split in to 2 sections, ‘Unspecified’ possessions covers smaller value ideas altogether and ‘Specified’ possessions where higher valued items are individually added to the policy.
Covers your trade stock for standard perils like breakfast food, toiletries, or any other items that you may sell.
Covers your frozen or chilled stock kept in freezers, for standard perils, in the event of breakdown of refrigeration units, or accidental failure of public electricity supply.
If your guest house is licensed and you sell alcohol you may require cover for wines and spirits. This can be a popular feature if you have a public bar.
Protecting Your Liability As A Guest House Owner
Possibly the most important aspect of a guest house policy. This section gives you peace of mind should a guest be injured whilst at your guest house.
All our policies automatically include public & products liability from £2 Million.
N.B. We see time and time again where customers thought their home insurance covered guests staying because it showed Public Liability cover on their home policy. A home policy will not give you cover for paying guests.
If you employ anyone to help out at your premises including chefs, cleaners, receptionists or similar then legally you are required to have Employers Liability insurance cover in place.
Some insurers automatically include this covers, but some insurers charge extra to include.
Employers Liability cover gives you protection against injuries to employees, and as their employer should you be liable you know you have cover in place to defend or settle with the employee accordingly.
Optional Guest House Add-Ons
As well as the main covers above you may want to add some of the below useful covers. Policies may automatically include some of these, some guest house policies charge extra for these, and some B&B policies may not offer these covers, check your quote thoroughly.
This can be a very important cover to have included under a guest house policy. If your property is damaged by one of the insured perils, lets just say a fire, and you are unable to trade or let any rooms out for 12 months whilst the property is being repaired then your normal income would have disappeared.
Could you survive with no income for 12 months?
Luckily, ‘Business Interruption’ cover will reimburse you for your financial losses.
Many policies will give you cover automatically, but check to make sure, and if covered make sure you have enough cover.
Usually based on your gross profit and you have an indemnity period usually at 12 or 24 months, higher limits are available. For larger guest houses we recommend a minimum of 24 months cover. This indemnity period should represent the maximum period it could take to get your guest house back up and running after a total loss event.
Covers stock whilst in transit for damage caused, for example, you’ve driven to the local cash & carry and on the way home you’re involved in an accident which ruins the stock you’ve just purchased.
The buildings section will normally cover glass in windows or internal doors, and contents cover will cover the glass in fixed items like a display cabinet etc. If you don’t own the property then you may still be responsible for damage caused to window panes.
Also you may require cover for external signs and canopies outside your guest houses. Basic B&B policies often exclude this cover.
If you have a licensed guest house, i.e. you sell alcohol to residents or the public, then you may require loss of licence cover. It covers the reduction in value of your business as a result of non-renewal or withdrawal of your licence from causes beyond your control.
It doesn’t give you cover if it’s taken away, for say, serving underage people.
This can cover business money, crossed cheques, postal orders kept at the premises during and outside of business hours which may be stolen or damaged by one of the standard perils.
As it says it covers customers, guests or employees personal effects, like baggage etc for the standard perils. Some companies include cover automatically, some will include as a chargeable extra, some policies don’t offer this cover.
Cover is provided for costs incurred in pursuing or defending the legal rights of the business in relation to statutory employment and taxation legislation, contract disputes and in pursuit of common law actions against third parties for nuisance and property damage. You will normally be charged extra for this cover.
Q: Frequently Asked Questions
Below we have answers to some of the common questions we get asked along with explanations to guest house jargon.
A: When insuring the buildings and contents of your B&B or guest house, the insurance policy will normally cover you for the following perils. Fire, lightning, explosion, aircraft, storm, flood, escape of water, theft, vehicle impact, riot, civil commotion, and malicious damage. These are generally the ‘Standard’ Perils.
Accidental Damage caused by guests isn’t a ‘standard’ peril, some insurers will include automatically, some wont offer cover at all and some charge a fee for this peril.
Subsidence, ground heave and landslip cover can also be included as an extra although most companies include this cover as standard nowadays.
A: If you have made any claims on previous policies within the last 5 years, please make sure you tell your insurers, no matter how small they were, and whether the insurer paid our or not. Failure to disclose previous claims will more than likely invalidate your policy and any future claims may not be paid. Just be honest with the insurance companies and they will be fair in the event of a problem.
If you have a policy with us and you need to make a claim, ideally we say try and contact us first. Different insurers have different procedures for reporting and managing claims. We will be on hand to advise and help you from start to finish.
For emergencies a claimline number can usually be found in the policy wording.
A: Probably not, no. The buildings should be insured for the full ‘Rebuilding’ cost should that property be destroyed beyond repair by an insured peril, e.g. a large fire and not based on the current market value. The rebuilding cost should take in to account the main property, any outbuildings, walls/gates/fences, driveways and paths. The rebuild value should include costs for removing all debris, architects and other related fees, plus the cost of reinstating the property to a ‘like for like’ state including costs for all materials and labour. When you purchase a guest house part of the cost includes the value of the plot, a rebuild cost does not need to include the plot as you’d already it.
Things that can alter a rebuild value can include non-standard construction materials, hard to access postcodes, and listed properties.
If you have a mortgage on your guest house, then quite often as part of that mortgage they will insist on the property being insured for a certain amount.
Although we can’t advise you on how much to insure for, we can provide advice on where you can go for help. Here are 3 suggestions:
1.The most accurate way to obtain a rebuild cost for your guest house is to hire a chartered surveyor to carry out a professional assessment. They will make sure it’s accurate and as well as making sure you’re not underinsured, it will also ensure you’re not insuring it for too much and paying unnecessary insurance costs. If it’s a new purchase then you may have had a survey that included the required figure.
2.A FREE option is to login and use the Building Cost Information Service (BCIS) rebuild calculator. Put in some of the property details and the dimensions of your guest house and this will give you a rough estimate of the rebuild. Click Here to go to their website.
3.The third option we recommend is RebuildCostAssessment.com (an RICS regulated company) who create an online valuation by using various tools and in-house resources to get an accurate rebuild cost. We can get discounted rates if you’d like to go ahead with the option, a cheaper alterative than going down the full chartered surveyor route.
A: No. All insurance companies have a standard policy excess for claims. This is the amount you will have to pay towards a claim and most of our policies have a £100-£250 standard excess.
A £500 excess is quite a high excess for a small business owner to find up front which is why we look to give customers as low an excess as possible.
Voluntary excess’s can often be added and insurers will offer a small discount, but the discounts offered are quite small in relation to the higher excess you will have on the policy.
How Does The Excess Work?
E.g. Someone with a £250 policy excess has a fire which causes £4,000 of damage. The clients claim would be settled for £3,750 (£4,000 damages less £250 excess which the client must find).
A subsidence, heave or landslip excess is often £ 1,000 as standard, unless the property is in a subsidence risk area, when the excess may be increased or subsidence cover excluded altogether.
Additional excess’s may be applied for certain risks including, high risk theft areas, flood zones or escape of water claims.
Please read your insurance terms to ensure you fully understand how much you will have to pay towards any claim.
A: You’re not normally automatically covered for work away. Different insurers have different rules depending on exactly what you are doing and what type of policy you are on.
If you cook food at your guest house and take it to a local market where you have a stall to sell the food and promote your guest house, then liability may be able to be extended on your guest house policy.
If you cater for events, or work as a chef elsewhere then a guest house policy cannot usually be extended as it’s not related to the guest house, a separate event policy may be required.
Give us the full details of what catering you do and we’ll find the right covers for your needs.
A: Yes we do. Some guest house insurers wont provide cover for licensed premises.
Luckily, we have plenty of insurers that are quite happy to insure you for selling and serving alcohol to residents staying with you.
If you have a bar which is open to the public again we can cater for this but will normally need to be placed on a hotel insurance scheme as it produces a higher and different type of risk for insurers.
A: Possibly. Most B&B’s cook breakfast and a simple pan fryer on a hob cooking sausages is fine. Most insurers are also quite happy if you have a small table top fryer.
When it start’s getting to bigger fryers then terms or issues can occur, few standard guest house insurers will quote if there’s a fish and chip shop style frying system installed.
Just provide us with the full details of your frying equipment and we’ll make sure you’re on a suitable policy.
A: If you’re luckily enough to own a swimming pool, or another leisure facility then wow, but please let us know, insurers will often cater for these but premium loading’s, certain terms or restrictions may be applied due to the higher risk they impose.
Other types of facilities may include a gym, a sauna, steam room or Jacuzzi, a tennis court or even a children’s play area.
Failure to inform your insurance company could invalidate a claim should someone injure themselves.
A: If you are looking to have any contract with the local authority or DSS to take in any of their customers then make sure you are get insurance quotes well in advance.
Nearly all guest house insurers will refuse cover if you let rooms on this basis. We do have a couple of specialist guest house schemes that will cater for this, but they will generally be a lot more expensive than a standard guest house policy.
Let us know your intentions, how often you’ll take in these customers, how many rooms will be used, and will it be short term or long term residents.
These answers will help us search the right market for you.
A: With the right policy Yes.
Guest house owners are starting to diversify in to other areas, people with lovely gardens are finding that catering for wedding receptions and private parties can be a lucrative earner.
For some insurers however it’s a headache. With the possibility of having 100’s of drunken wedding guests stumbling around a guest house or garden, send bells ringing (not the wedding type) straight away!!
We will ask a variety of questions to get a better understanding of what you offer, including how often the event happen, how many you can cater for, will they have access to the guest house or do you own a marquee, will you organise catering or live entertainment or will the customers provide their own. This then builds up a picture for insurers to work out what risk is involved and if they’ll cover it.
Don’t worry though we have insurers who will cover all of this.
A: Many guest houses slow down or close in some of the winter months when they become quieter. This can be a good time to take those all important holidays, but insurance is something you need to be wary of.
Most guest house insurers will provide full cover providing you are not away from your guest house for more than 30-45 days at a time.
We have seen some owners take extended breaks up to 3 months away, this can be more tricky and few insurers will provide cover, or if they do then some perils will be excluded after a certain period of unoccupancy , these can be theft, escape of water, and others.
Let us know how long you intend to be away and we can check to make sure your policy is adequate.
Things we recommend when going on holiday include, keeping your heating on at a sensible warm temperature or completely turn the water off and draining the system, have a designated friend or neighbour regularly check the guest house for problems and to remove post, and don’t broadcast on social media that you’re going away, it’s a perfect invite for thieves.
A: Yes, probably. Where your Bed & Breakfast or guesthouse is situated has a large initial bearing on the cost of your insurance.
Crime rates are generally higher in a city than a village or town, because of this you have a higher risk of being burgled or having a malicious damage claim, therefor a higher premium is generated. Insurers will have different rates for all postcodes and with more sophisticated data gathering, insurers can now rate down to individual streets or properties, not just an area.
In addition if you’re near a river, the sea, or in any other flood or subsidence risk areas this can also increase a price or restrict cover.
We always recommend new guest house owners to obtain insurance quotes well in advance of them buying to make sure there aren’t any issues with the property or the area they are looking to buy in.
A: AirBNB is a website platform where you can advertise rooms in your home for short term rental. The popularity of the site has grown enormously from a company that only started in 2008 to a company that now advertise over 6 million rooms and is a £20+ billion company, so they’re here to stay.
People can advertise a variety of room and sleeping options, from your standard B&B, through to yurts in the garden and self-catering treehouses.
Because of this there is no ‘one insurance policy covers all’ option even through this is often advertised by insurers.
Another thing we see is homeowners who just rent the odd room or two believing their standard home insurance policy will provide liability cover. As renting a room will be classed as running a business a standard policy will give you inadequate cover.
We will talk with you to find out exactly how you operate, whether it’s B&B, bed only, or self-catering etc as this will determine the type of policy we place you on.
A: No. Bed & breakfast usually means the host cooks and provides breakfast to a designated dining area. Continental breakfasts may also be offered.
Self-catering is when the owners have bedrooms or maybe a separate annexe which has it’s own cooking facilities, i.e. oven, hobs, microwaves and similar.
Insurers rate self-catering as a higher risk due to owners not having control of cooking equipment which could cause a fire.
If you provide any self-catering facilities please make sure your insurers are aware of this. Some insurers wont offer cover if part of a guest house, others will rate the risk accordingly.
We hope the above gives you a better understanding of what a guest house insurance policy can cover, but if there is anything else that you wish to know about on the policies or any aspect of the cover then please don’t hesitate to contact our office on 01288 353999.