How to arrange specialist b&b or guesthouse insurance

To run a B&B or guesthouse, you must have a specialist business insurance policy. Your standard home insurance is not valid for commercial activity and will not cover you. The essential cover you need to arrange is Public Liability to protect against guest accidents, commercial Buildings and Contents insurance for your property, and Business Interruption to cover lost income if you are forced to close temporarily.

Why your home insurance isn't enough

Standard home insurance is designed for the risks of a private residence, not a business where you have a duty of care to paying guests. A commercial B&B policy recognises that you have members of the public on your property, that you are likely preparing food for them, and that your contents include business items. Failing to get the right cover could leave you personally liable for thousands of pounds in the event of a claim.

Key types of cover you'll need

A dedicated guesthouse policy bundles several types of essential cover together. The core components are:

1. Public Liability Insurance

This is arguably the most important cover. It protects you if a guest or member of the public is injured, or their property is damaged, while at your B&B. For example, if a guest slips on a wet step and breaks their arm, this insurance would cover the legal costs and any compensation you have to pay.

2. Commercial Buildings & Contents Insurance

This works like standard home insurance but is designed for a business. It covers the physical structure of your property and its contents against events like fire, flood, and theft. Crucially, it covers both your personal possessions and the business contents, such as the furniture in guest rooms, kitchen equipment, and bedding.

3. Business Interruption Insurance

If a serious event like a fire or flood means you have to close your B&B for repairs, this cover protects your finances. It compensates you for the loss of income you would have earned during the closure period, helping you to pay bills and stay afloat until you can reopen.

Other cover to consider

Depending on your specific setup, you may need or want to add other policies:

• Employers' Liability Insurance: This is a legal requirement if you hire any staff, even a part-time cleaner or someone to help with breakfast. It covers you if an employee becomes ill or is injured as a result of working for you.
• Legal Expenses: This can cover your legal costs in the event of a variety of disputes, such as employment tribunals or tax investigations.
• Theft by Employees: Also known as a fidelity guarantee, this covers you for loss of business money or goods caused by employee theft.

How to get the right policy

1. Use a specialist broker: Find an insurance broker who specialises in the hospitality sector. They will understand the unique risks you face and have access to policies designed specifically for B&Bs.
2. Be accurate and honest: When getting a quote, provide complete and accurate information about your business, including the number of guest rooms, whether you serve evening meals, and any extra facilities like a hot tub.
3. Compare quotes: Get at least two or three quotes to compare cover levels and price, but don't choose on price alone. Check the policy excess (the amount you pay on a claim) and any exclusions.

Top Tip: Once you receive your policy documents, read them carefully to understand exactly what is and isn't covered. Review your cover every year to ensure it still meets the needs of your business as it grows.