Bed and Breakfast Owners Need to “Insure” They Don’t Lose Their Shirt

Bed and breakfast owners face many challenges when starting up their new business.  It isn’t always just the lenders who are averse to the risk facing b and b owners!

For many years bed and breakfast owners were forced into one of the following scenarios to access insurance to protect them against the perils of running a home-based business:

  • Commercial insurance policies  – which were originally designed for small hotel operations.  These policies covered the business aspect of the risk, but left the personal liability side exposed.  This type of policy also carried a high price tag in terms of premium along with it.


  • Standard home-owners policies + rider (or sometimes even a second liability policy) was required to protect the business liability portion.  In addition to being costly, while it protected the personal side of the risk, it neglected the business side as only liability was covered.


  • No additional insurance – homeowners were leaving the business side of things uninsured, and hoping that if a claim occurred, their homeowners’ policy would respond.

I’m pleased to say that doesn’t have to happen anymore.  Approximately 10 years ago this situation began to change as fully comprehensive policies were developed that include both homeowners’ comprehensive form and a commercial insurance form in one policy at rates comparable to regular homeowners’ policies.

When shopping for insurance for your bed and breakfast business, the following topics need to
be considered in your policy:

1. Property Insurance Coverage

  • Does the policy provide a guaranteed replacement cost for both building and contents?
  • Are both personal and business property (contents)  insured under one“blanket” limit? Does this clause eliminates any haggling over whether certain contents were for business or personal use?
  • Are your outbuildings (any detached building on your premises such as garages/sheds) will have an automatic sub-limit of your Building value? At what percentage?
  • Are you also covered for this like floods, sewer back-up, earthquakes, etc?  Depending on where you are located, these things may not be covered, or only available at added expense)
  • Are your signs covered?
  • What about coverage for valuable papers (such as tax receipts, billing invoices, contracts, etc), computer systems and fire department charges?

2. Liability Coverage
Beside General Liability and Aggregate Insurance (total amount payable in one policy term), does your policy offer:

  • Innkeepers Legal Liability – To pay for guests belongings following a loss.
  • Host liquor liability – Protects the B&B owner in case of liquor related lawsuit
  • Tenants Legal Liability – If you rent/lease your B&B and do not own the premises
  • Advertising Liability – protect you from copyright lawsuits?

Business Interruption Coverage

  • Will you be able to collect any lost income due to your business being shutdown due to an insurable peril (i.e. Fire, Flood, Windstorm, etc)?. For example, inthe event that a fire causes you to close down your B&B for an extended period of time while rebuilding, the insurance company will pay the total amount of your loss of business. This coverage is very important as you could sustain such a loss during your busiest time of the year, which would correlate directly with a severe loss of income.

3.  Contingent Business Interruption:

Does your policy include coverage that will allow you to recoup lost business income from an insurable peril occurring off the insured’s premises?. For example, many B&B’s are located in townships that have a major appeal to tourists. In Niagara-on-the-Lake, the Shaw Festival is a major draw. If the Shaw Festival suffered a fire loss and were to be shut down for any length of time to rebuild, the tourism to Niagara-on-the-Lake would potentially decline during this period. B&B owners in Niagara-on-the-Lake could also expect to lose business during this period, as its “major draw” being unavailable would impact on a loss of business for the B&B owner.

4. Additional coverages to discuss with your broker:

Professional Fees and Extra Expenses
– extra costs may be incurred following a loss, and this coverage will pay for the extra charges. Costs such as hiring an accounting firm to help you recreate your books and costs for incidental expenses are covered under this type of coverage.

No longer is it necessary to leave your personal net worth and business operations exposed to risks as a result of high premiums.  A simple Google search of “Bed & Breakfast Insurance Canada” will net you a listing of the B&B insurance specialists in the country.  My advice is to contact one of these providers and have them quote your home and B&B.  The only cost to you is an investment of your time and the reward could be exponential in terms of the value you’ll receive, in both knowledge and better protecting your hard work.

Will you be better protected by the time you own your bed and breakfast, or roll with the punches with what you have now?

Ryan Lindsay is a B&B Insurance Specialist, with Verge Insurance Group.  It was established in 1953 and has grown from its roots in St. Catharines to become a leading Canadian independent insurance was developed by Ryan to help his in-laws better protect their B&B and has grown into a national program helping countless of other B&B owners alike.

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