Hostel Insurance Policy Information
Hostel Insurance. Hostels have, over time, evolved to become more than inexpensive lodgings where travelers can rest their heads for the night. Many adventurers have also grown to love the social nature of staying at this type of shared accommodation, as hostels make it easy to meet new friends.
Hotels provide lodging to the general public for a fee. Rooms may be rented on a short-term or long-term basis.
The hostel may offer a bar or lounge, beauty or barber shops, business center with computers for guests, child or pet care, full-service restaurant, gift shops, gyms, laundry, and dry-cleaning, limousine services, spas, swimming pools, or other recreational attractions.
Many hotels also offer meeting facilities for seminars and conferences. Most hotels offer rooms through both in-house and third-party websites. All room charges, including mandatory gratuity charges or "resort fees," must be disclosed to prevent allegations of deceptive advertising practices.
Websites should clearly state whether the facility and its guest rooms can accommodate those with disabilities.
The Trafficking Victims Protection Reauthorization Act (TVPRA) permits victims of human trafficking to sue businesses such as hotels for preventing trafficking that occurred on their premises. Staff should be trained to recognize signs of illegal sex trafficking.
Hostels typically offer either bunk beds or rooms shared with multiple strangers, as well as kitchens and lounges to prepare meals and relax.
Whether you are investigating what it would take to fulfill your dream of opening a hostel, or you already own and manage one, it is important to consider not only the considerable opportunity that lies within this branch of hospitality, but also the risks of operating a hostel.
What types of hostel insurance are needed? Discover more in this guide.
Hostel insurance protects your lodging business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked hostel insurance questions:
- What Is Hostel Insurance?
- How Much Does Hostel Insurance Cost?
- Why Do Hostels Need Insurance?
- What Type Of Insurance Do Hostels Need?
- What Does Hostel Insurance Cover & Pay For?
What Is Hostel Insurance?
Hostel insurance is a type of insurance policy designed specifically for hostel owners, operators and managers. It provides protection against various risks and liabilities that can arise from running a hostel, including damages to property, theft, fire, accidents, and injury to guests.
The coverage may also include protection for business interruption, loss of income, and liability claims. Hostel insurance is important as it helps hostel owners protect their property, assets, and reputation, and provides financial security in the event of unexpected events.
How Much Does Hostel Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for hostels ranges from $47 to $79 per month based on location, size, revenue, claims history and more.
Why Do Hostels Need Insurance?
Hostels face some of the same risks common to all commercial ventures, regardless of their field, but in addition, those who own and manage a hostel must also consider industry-specific perils.
Any business with physical assets may, for example, suffer severe losses if an act of nature - such as an earthquake, flood, wildfire, or hailstorm - ravages their locality.
Hostels are no exception, and they may be visited by unfortunate events such as theft, vandalism, and accidents as well. Such perils lead to costly business interruptions in addition to massive repair or replacement expenses.
Hostels also have to prepare for scenarios in which a guest's personal belongings are stolen on the premises, or staff accidentally damages them.
As the hostel industry in large part relies on online reviews and web bookings, your website could fall victim to cyber crime, or inadvertently using copyrighted material on your web page could lead to lawsuits. Guests and employees alike may be injured on the premises.
These perils, and numerous others, could strike at any time - inevitably bringing overwhelming costs with them. A hostel that has properly insured itself will, however, not need to worry, as their insurer will cover a large portion of the expenses associated with major perils.
The fact that this could save your business from debt, or even bankruptcy, is the most important reason to carry the best hostel insurance possible.
What Type Of Insurance Do Hostels Need?
The exact nature of a hostel's insurance needs depend on its unique circumstances and risk profile. The location and size of your hostel, the amenities it offers, the number of employees, and the number of guests it typically accommodates all influence the types of coverage that will best protect your business.
Even crime rates in your locality should be considered. Because of this, seeking advice from a skilled commercial insurance broker who understands the hospitality business is essential. Meanwhile, here is a glimpse at the most important types of hostel insurance coverage:
- Commercial Property - Designed to protect your financial future if perils like natural disasters, theft, and vandalism were to impact your hostel, commercial property insurance is able to cover your physical building as well as many of its contents. Guests' personal property is, however, not included within this protection.
- Commercial General Liability - Third party property damage or bodily injury claims are a major threat to small business owners, as they lead to monumental expenses even if the claim is ultimately dismissed. This form of hostel insurance coverage helps pay for your legal costs, such as attorney fees and settlement payouts.
- Innkeepers Liability - Hostels are obliged to take reasonable steps keep their guests' personal property safe on their premises. In case of theft or accidental damage on the part of staff, innkeepers' insurance pays for the costs.
- Workers Compensation - Any hostel that employees requires workers' comp to cover the medical costs and lost wages of an employee who sustains a work-related injury.
While these types of hostel insurance form the core of a comprehensive insurance plan, hostels may wish to consider other options, such as equipment breakdown insurance, commercial auto insurance, and crime insurance, as well.
A seasoned commercial insurance broker will be able to answer all questions pertaining to your hostel's unique situation.
Hostel's Risks & Exposures
Premises liability exposure is high due to the number of guests. The operation should meet all life safety codes to assure guest safety. To prevent trips, slips, and falls, the hostel must be well maintained, with floor covering in good condition. The number of exits must be sufficient and well marked, with backup lighting in case of power failure.
Steps should have handrails, be well-lighted, marked, and in good repair. Balconies should be regularly inspected and maintained. Rooms should be treated to prevent pest infestations such as bedbugs. Sidewalks and driveways should be free from defects and cleared of ice and snow in inclement weather. Locks should be regularly changed to prevent unauthorized access.
Lead paint should be contained. Personal injury exposures include allegations of assault, discrimination, false arrest, invasion of privacy, wrongful detention, and wrongful eviction.
Products liability exposures can be high if the boarding house serves meals. Employees should be trained in the proper handling of consumables to prevent contamination, foreign objects in food, food poisoning, or the spread of transmissible diseases. Posting lists of ingredients can prevent allergic reactions from food and beverages.
Workers compensation exposure is moderate. Cleaning and maintenance operations can cause workers to experience lung, eye or skin irritations and reactions. Slips and falls, back injury, hernias, sprains and strains from lifting and working at awkward positions are common. Food preparation operations can result in cuts, scrapes, and burns.
Interaction with guests may involve situations that could produce injuries, such as assault. Employees should be trained in dealing with rowdy guests. Animals owned by guests can bite, scratch, or kick workers.
Property exposures can be high as most hostels have been converted from older homes or lodging facilities to their current occupancy. Conversions should be handled by professionals with appropriate permits and licenses obtained. Electrical wiring, plumbing, cooling, and heating systems must be updated to current code. The age, condition, size, repair, and roof of the hostel affect the potential for loss as damages must be repaired to match the rest of the structure.
If there is commercial cooking, the kitchen should also be upgraded to meet NFPA requirements. Cooking should be restricted to only the central eating area. Smoking and the use of candles in guests' rooms should be prohibited. Hard-wired smoke detectors should be installed in all guest rooms and common areas. A staff member should remain on duty 24-hours a day.
Regular inspections should be made of the rooms to verify that rules are followed. Business income may be high as there may not be backup facilities available to the owner.
Inland marine exposure is limited to accounts receivable if the hostel bills for services, computers, and valuable papers and records for guests' and mortgage information. Duplicates should be made of all data and kept off site for easy restoration after a loss. There may be contractors' equipment for maintenance, repairs, and lawn care.
Crime exposure is from employee dishonesty and theft of money and securities. References and background checks should be conducted on all employees. Monetary transactions must be controlled through the use of receipts and regular monitoring.
Money should be deposited every day with no money left overnight. Guest property coverage provides protection for guests' property from theft by employees, other guests, or trespassers. Access to guest rooms must be limited to those authorized to do so.
Business auto exposure may be limited to hired non-owned liability for employees running errands. If there are owned vehicles, such as those used to service units, any driver should have a valid driver's license and an acceptable MVR.
Vehicles must be maintained and records kept in a central location. If guests are transported, the exposure increases.
What Does Hostel Insurance Cover & Pay For?
There are several reasons why hostels may be sued. Some common reasons include:
- Personal injury: Hostels may be sued if a guest is injured on the property due to negligence or unsafe conditions.
- Property damage: Guests may file a lawsuit if their personal property is damaged or stolen while staying at the hostel.
- Discrimination: Hostels may be sued if they discriminate against guests based on their race, gender, or other protected characteristics.
- Breach of contract: Guests may sue if the hostel breaches its contract by failing to provide the promised services or accommodations.
In order to protect themselves from lawsuits, hostels can purchase liability insurance. Liability insurance helps to cover the costs of legal fees, settlements, and damages if a hostel is sued.
For example, if a guest slips and falls on a wet floor in a hostel and suffers injuries, the hostel may be sued for negligence. If the hostel has liability insurance, the insurance company can help pay for legal fees and any settlement or damages awarded to the guest.
Similarly, if a guest's personal property is stolen from a hostel and the guest files a lawsuit against the hostel, the liability insurance can help cover the costs of the lawsuit.
In cases where the hostel is accused of discrimination, liability insurance can help cover the costs of legal defense and any damages awarded if the hostel is found liable.
In the event of a breach of contract lawsuit, liability insurance can help cover the costs of legal fees and any damages awarded if the hostel is found to be in breach of the contract.
In general, liability insurance provides hostels with financial protection in the event of a lawsuit, allowing them to focus on providing a safe and enjoyable experience for their guests.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7011 Hotels And Motels
- NAICS CODE: 721199 All Other Traveler Accommodations
- Suggested Workers Compensation Code(s): 9052 Hotel - All Other Employees & Salespersons, Drivers, 9058 Hotel - Restaurant Employees
Description for 7011: Hotels And Motels
Division I: Services | Major Group 70: Hotels, Rooming Houses, Camps, And Other Lodging Places | Industry Group 701: Hotels And Motels
7011 Hotels And Motels: Commercial establishments, known to the public as hotels, motor hotels, motels, or tourist courts, primarily engaged in providing lodging, or lodging and meals, for the general public. Hotels which are operated by membership organizations and open to the general public are included in this industry. Hotels operated by organizations for their members only are classified in Industry 7041. Apartment hotels are classified in Real Estate, Industry 6513; rooming and boarding houses are classified in Industry 7021; and sporting and recreational camps are classified in Industry 7032.
- Auto courts
- Bed and breakfast inns
- Cabins and cottages
- Casino hotels
- Hotels, except residential
- Inns, furnishing food and lodging
- Recreational hotels
- Resort hotels
- Seasonal hotels
- Ski lodges and resorts
- Tourist cabins
- Tourist courts
Hostel Insurance - The Bottom Line
To learn more about the suggested types of hostel insurance policies you'll need, and how much coverage you should carry and the premiums, speak with a reputable broker that is experienced in commercial insurance.
Additional Resources For Lodging Places Insurance
Find out what types of business insurance that hotels, motels and other lodging places should have to protect their varied operations.
- Bed & Breakfast
- Boarding & Rooming Houses
- Fraternity Houses
- Hotel Motel
- Sorority Houses
- Specialty Hotels And Motels
The hotels, motels, and other lodging places industry is a highly competitive and fast-paced industry, with businesses constantly striving to attract and retain customers. This means that hotels, motels, and other lodging places need to be prepared for any potential risks or challenges that may arise. One way to do this is by obtaining business insurance, which can provide protection against a range of different risks.
One of the main reasons why the hotels, motels, and other lodging places industry needs insurance is to protect against property damage. These businesses rely on their physical assets to generate revenue, so any damage to these assets can have serious financial consequences. Business insurance can provide coverage for damages caused by natural disasters, fires, and other incidents, helping hotels, motels, and other lodging places to repair or replace damaged assets.
Another reason why the hotels, motels, and other lodging places industry needs insurance is to protect against liability claims. These businesses are responsible for the safety and well-being of their guests, so any incidents or accidents that occur on their premises could result in liability claims. Commercial insurance can provide coverage for these types of claims, helping hotels, motels, and other lodging places to cover the costs of legal fees and settlement payments.
Finally, the hotels, motels, and other lodging places industry needs commercial insurance to protect against loss of income. These businesses rely on a steady stream of revenue to stay afloat, and any disruptions to this revenue could have serious financial consequences. Insurance can provide coverage for loss of income caused by unforeseen events, such as natural disasters or pandemics, helping hotels, motels, and other lodging places to stay afloat during difficult times.
Overall, the hotels, motels, and other lodging places industry needs insurance to protect against a range of different risks and challenges. By obtaining the right coverage, these businesses can ensure that they are prepared for any potential setbacks and can continue to thrive in a highly competitive industry.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Equipment Breakdown, Accounts Receivable, Computers, Valuable Papers and Records, Employee Dishonesty, Guests Property, Money and Securities, General Liability, Employee Benefits, Liquor Liability, Umbrella, Business Auto Liability and Physical Damage, Hired and Non-Owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Spoilage, Bailees Customers, Commercial Articles Floater, Contractors Equipment, Fine Arts, Signs, Special Floater, Computer Fraud, Forgery, Cyber Liability, Employment-related Practices, Garagekeepers And Stop Gap Liability.