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  • Tanvir Ahmad

Hotel Property Insurance: What's Covered and What's Not

Updated: Dec 20, 2023

Hotel property insurance is a critical component of risk management for hotel owners and operators. It provides financial protection against a wide range of potential risks and unforeseen events that could otherwise have a significant impact on the business. However, like any insurance policy, it's crucial for hoteliers to have a clear understanding of what is covered and what is not. This article explores the key aspects of hotel property insurance, shedding light on the coverage it offers and the common exclusions.

I. Covered Risks:

Property Damage:

Hotel property insurance typically covers physical damage to the hotel building and its contents caused by covered perils such as fire, vandalism, or natural disasters like earthquakes and floods.

Business Interruption:

This coverage helps mitigate financial losses resulting from a temporary closure due to a covered event. It may include compensation for lost revenue, ongoing expenses, and even the cost of temporary relocation.

Liability Protection:

Hotel property insurance often includes liability coverage, protecting the hotel against legal claims for bodily injury or property damage that may occur on the premises.

Equipment Breakdown:

Coverage for the repair or replacement of essential equipment, such as HVAC systems, elevators, and kitchen appliances, in the event of a mechanical breakdown.

Loss of Income:

Insurance may cover the loss of income resulting from a covered event, helping the hotel recover financially during the restoration period.

II. Common Exclusions:

Acts of Terrorism:

Many policies exclude damages caused by acts of terrorism. Hoteliers may need to consider purchasing additional coverage for protection against this specific risk.

Wear and Tear:

Standard property insurance typically does not cover damage resulting from normal wear and tear or gradual deterioration. It is the responsibility of the hotel to maintain the property in good condition.

Nuclear Hazard:

Damage caused by nuclear events is often excluded from standard policies. Specialized coverage may be required for protection in regions with increased nuclear risk.

Employee Dishonesty:

Theft or damage caused by dishonest acts of hotel employees may not be covered unless a specific employee dishonesty policy is in place.

Flood and Earthquake:

While some policies cover natural disasters, coverage for floods and earthquakes may be excluded or subject to specific limitations. Separate policies may be necessary for comprehensive protection.


Hotel property insurance is a vital safeguard for the hospitality industry, providing financial security against unforeseen events. However, understanding the terms and conditions, as well as the exclusions, is crucial for making informed decisions about coverage. Hotel owners and operators should work closely with insurance professionals to tailor policies that meet the specific needs and risks of their establishments. Regular reviews and updates to the insurance portfolio ensure that the coverage remains relevant and effective in the ever-evolving landscape of the hotel industry.

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