Guest house insurance

Key takeaways

• Employers’ liability insurance is required if you have employees, including volunteers or family members

• Landlord insurance does not typically cover B&Bs or guest houses but can cover holiday lets with specific terms

• Business insurance is essential as the property is used for business purposes

Do I need guest house insurance?

While it isn’t mandatory to take out insurance to run a guest house, there are a lot of great benefits. The right insurance can help you cover the cost of legal fees, repairs, and even lost income if something unexpected happens.

The only insurance that we might say is necessary for a guest house is employers’ liability insurance, which is a legal requirement in the UK if you have hired any employees. This applies even if your employees are volunteers or family members.

Will standard home insurance cover a guest house?

A standard home insurance policy won’t cover guest houses or any property associated with your business. Failing to inform your insurer that paying guests are staying on your property can invalidate your policy and prevent you from claiming.

If you have a guest house or are preparing to rent out a room in your home, speak to your insurance provider before making any big decisions to confirm what your insurance will cover.

Will landlord insurance cover a guest house?

Landlord insurance doesn’t typically cover B&Bs or guest houses. The purpose of this type of insurance is to protect whole properties that are being rented out, not single rooms or separate structures on your property.

However, landlord insurance can cover holiday lets that are separate from your residence. Holiday lets will have special terms when covered by a landlord insurance policy, so you will need to read your insurance documents carefully.

Some providers may not cover you if you use the property as a holiday home for yourself and your family, or if you expect the property to be vacant for more than 90 days at a time during the year.

What insurance do I need for my guest house?

The type of insurance that’s most relevant for protecting a guest house is business insurance. That is because you are essentially using your property as a place of business.

At the heart of most business insurance policies, you will have public liability insurance, employers’ liability insurance, or professional indemnity insurance.

You’ll also have the ability to bundle other important types of business insurance cover so you can manage all of the essential insurance for your business with just one policy.

Here are the types of insurance cover you should consider getting to protect your guest house:

Public liability insurance

Public liability insurance will help you cover legal fees and costs associated with liability claims. If someone renting a room in your guest house is involved in an accident relating to your business – for example, if they trip over a loose wire or if a burst pipe damages their belongings – your insurance will help you cover compensation or to fight the claim in court.

Employers’ liability insurance

If you have hired any staff to help you run your guest house, even on a voluntary basis, then you are legally required to take out employers’ liability insurance.

Product liability insurance

Product liability insurance, like public liability insurance, will help you cover costs related to claims of liability. Product liability insurance, however, relates specifically to incidents involving the products you provide your guests. This can include any food you serve, toiletries you provide, or souvenirs you sell.

Business building and contents insurance

Standard home insurance won’t cover a guest house accepting paying guests. So, to protect your property and its contents from theft, loss, and damage, you can take out business building and business contents insurance.

These can be bought individually if you only need one of these to types of insurance or together as a single policy.

Business interruption insurance

Business interruption insurance will help you keep your business afloat if you an insurable event prevents you from operating as usual. For example, if a flood prevents you from accepting guests, your business interruption insurance will supplement a proportion of your usual income until your guest house is back up and running.

Key person insurance

If a person integral to the business passes away or is diagnosed with a critical illness, key person insurance will pay out a lump sum to help the business manage the loss. It can be used to compensate your guest house business for the potential loss of income and generally keep up with expenses while the business restabilises.

How much is guest house insurance?

The cost of insuring a guest house can differ greatly depending on your business and certain other factors. You can determine whether your insurance will be more or less expensive than average by looking at some of these details:

Business size

Bigger businesses will almost always cost more to insure. The size of your business can be interpreted in a number of different ways, such as the number of rooms, your gross annual income, and the number of people you employ.

Location

Location can affect your insurance costs in a number of ways. Location can affect the average cost of repairs and services, the risks related to your business, and the value of your business.

Your chosen cover

Each of the different insurance types are priced differently, with some being more expensive than others. The types of cover you add to your policy and the maximum cover limits you choose will inevitably affect your premiums.

Your chosen excess

One minor way you can reduce the cost of your guest house insurance policy is by increasing your voluntary excess. This is an amount that you agree to pay to cover costs related to an insurable event before your insurance policy pays out. You should always consider your excess carefully and make sure it is affordable.

Your history

If you a history of insurance claims, insurance will normally be more expensive for you. The history of your business can also generally affect your insurance cost, including how long your business has been operating and if you have filed for bankruptcy in the past.

Compare insurance for your guest house with MoneySuperMarket

With MoneySuperMarket, you can compare business insurance policies from a range of providers to find the best deal for the cover you need. It only takes a few minutes to start comparing and with our business insurance partner Simply Business, we'll help you find policies that give you exactly what you need to protect your guest house.