How to Start a Bed and Breakfast

(We'll get you all tucked in with everything you need to know.)
Christine Lacagnina Written by Christine Lacagnina
Christine Lacagnina
Written by Christine Lacagnina

Christine Lacagnina has written thousands of insurance-based articles for by authoring consumable, understandable content.

paul martin Reviewed by Paul Martin
paul martin
Reviewed by Paul Martin

Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.

Bed maid-up with clean white pillows and bed sheets in room of bed and breakfast.

Looks like you’re a brave people person with a passion for making a cozy space for weary travelers to stay, so you’re opening your own bed and breakfast. While we appreciate your ambition, it takes a bit more than just a comfy bed and a good selection of tea to run a successful business. You’ll need to plan right from the start to keep bringing in the money along with the strangers.

When the time comes to open up shop, having business insurance for your bed and breakfast is the key to maintaining smooth operations. All businesses come with risks (even the fun ones), so you’ll need to obtain protection during your preparation phase. Our independent insurance agents are here to help get you set up with the right coverage for your specific needs. But first, let’s talk B&Bs.

All about the Bed and Breakfast Industry

Bed & Breakfast/Hostel industry growth rate in the United States from 2013 to 2019

growth rate of bed and breakfast

While the overall growth rate may not be at an all-time high, the bed and breakfast industry has continued to grow over the years. The largest growth spike in recent years was 11.58% between 2014 and 2015, but the industry is still climbing, with growth of 4.64% projected from 2018 to 2019. Clearly, plenty of travelers are still seeking alternatives to hotels.

The percentage of travelers booking exclusively with hotels is shrinking

percent of travelers booking with hotels

As recently as 2015, 88% of guests were booking their vacation and business trip lodging only at hotels. As of 2017, that number fell by 8%. More and more travelers are choosing alternative lodging options, such as the popular Airbnb short-term hospitality service. Though some would argue that Airbnb isn’t exactly the same as more traditional B&Bs, the fact remains that this service (and others like it) are growing in popularity, while hotel stays are in a noticeable decline.

Millennials still account for almost 50% of Airbnb's total bookings

age difference of airbnb bookings

The Millennial generation made up the vast majority of Airbnb’s guests as of 2017. Considering that Millennials are projected to soon be the biggest generation population-wise, now might be the perfect time to start that B&B of your dreams.

Number of guests staying with Airbnb hosts during the summer

Number of guests staying in airbnbs during the summer

How to Start a Bed and Breakfast

Your ambition to start a new business is a great motivator, but it’s far from all you need to bring that dream to reality. Of course your vision will be specific and unique (as it should be), but we’ll take a look at some general steps to starting a bed and breakfast:

  • Step One: Planning. No successful business can begin without a solid plan—we’re willing to bet on that. First up, you’ll need to determine all kinds of stuff like your start-up costs, target market, business name, the products and services you’ll offer, and how long it’ll take you to break even and start turning a profit. You’ll also need to decide what kind of business you want to be (i.e., if you want to open up your own home to guests or purchase a separate property, etc.). Last, if applicable, you’ll need to scout out a location and actually purchase or rent said property, once you’ve found it.
  • Step Two: Legal stuff. Next, you’ll decide what kind of business entity you want to be (e.g., LLC, partnership, etc.), and then go through the proper channels for making it legal by registering with the government. You’ll also need to register for taxes and obtain any required permits and licenses.
  • Step Three: Money stuff. This phase involves opening a business bank account so you can accurately monitor your business’s financial performance, and this will also make your life a heck of a lot easier when it comes time to file your annual taxes. Then, it’s time to obtain your start-up costs and determine how much you’ll be charging customers/clients for any goods and services your business will offer.
  • Step Four: Define and build Your brand. What will your business stand for? How do you want the world to perceive it? These are just a couple of questions you’ll answer in order to define your brand. A solid, unique branding of your business will help it stand out from the competition.  Once the nitty-gritty has been figured out, it’s time to get to work building that brand. This generally involves designing business cards, building a website, and establishing a social media presence. If you’re clueless when it comes to Twitter or any of the other platforms, you can always hire (or beg) someone to take care of that aspect for you.
  • Step Five: Build your team. You’ve made all kinds of progress, and now it’s time to find people to actually do the work. Determine what kind of team you need, the different roles you need to fill and how many positions there are in each, then go about hiring your staff/employees/minions. You can advertise online, in your local newspaper, or go the old-school word-of-mouth route. Once you’ve got a solid team established, it’s time to get them trained.
  • Step Six: Iron out the details. For your bed and breakfast business, this could involve purchasing necessary linens and other household items, ordering supplies needed for your kitchen or dining area, organizing the rooms, designing cutesy signage, perfecting your turndown service and training the appropriate staff, etc. Basically, any of the specifics needed to make your bed and breakfast come to life will fall into this step.
  • Step Seven: Get coverage. The final step, and perhaps the most important, is to obtain the proper coverage. You’ll need business insurance to protect not only your B&B, but also your employees—and yourself. Business insurance is the pièce de résistance that’ll allow your bed and breakfast to keep providing a cozy night’s rest to globetrotters for years to come.

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What Is Bed and Breakfast Insurance?

Boiled down, bed and breakfast insurance is a satisfying meal of an insurance package designed to meet the specific needs of bed and breakfast owners. All the coverage offered by a basic small business insurance plan, as well as policy options tailored for the unique needs of B&Bs, are rolled into one.

A bed and breakfast insurance package simplifies the process of obtaining all necessary coverages for B&B owners while eliminating confusion and stress. Basically, it’s the best way to go.

What Does Bed and Breakfast Insurance Cover?

A bed and breakfast insurance policy is typically the easiest option when it comes to knocking out your extensive list of coverage needs all together in one tidy package. These policies offer the basics of business insurance coverage, including most of the liability insurance you’ll need, plus specific coverages tailored to your unique niche.

Here are several bed and breakfast insurance coverage options:

  • General liability: This coverage protects you against property damage or injury claims made by a third party. 
  • Workers' compensation: If your employees become ill, get injured, or die from a work-related incident, this aspect of the insurance will cover the financial ramifications. Depending on the type of work being performed, this coverage is often mandatory in most states. 
  • Property insurance: Covers loss of or damage to your physical property, including your office space, and often the inventory inside it. Protected mishaps include fires, storms, and more.
  • Cybercrime insurance: Covers the loss or theft of customers’ sensitive data, including credit card numbers and more. This coverage can also save your business in the event a deposit or money transfer is intercepted by cybercriminals.
  • Employment practices liability: Covers fees for lawyers and other financial ramifications if any of your employees are involved in harassment cases against coworkers or customers.
  • Communicable disease: Covers any illnesses transmitted to customers due to improper hygiene of your employees.
  • Business income: A part of property insurance, this aspect covers the financial loss suffered while a business is closed due to fire damage or other disasters.
  • Crime insurance: Covers the loss of money or guests’ other personal property left on the premises due to theft or fraud.

Your bed and breakfast insurance package will be assembled by selecting the coverages that work for your unique business from a big list of available options. Coverage applies to everything from lost business revenue to potential legal/court fees and beyond.

Who Needs Bed and Breakfast Insurance?

Whatever the size of your B&B or how many cats are on-site, if you’re offering lodging and morning meals to the public and paying employees, you’ll need protection. Bed and breakfast operation comes with a set of unique risks, both obvious and hidden, so coverage is essential if you own or operate any of the following:

  • Traditional B&B
  • Country inn
  • Homestay/Host home
  • B&B cottage
  • Airbnb
  • B&B guest house

Bed and breakfast insurance will cover all aspects of your business, regardless of the specific type you own. It’s always important to have protection for your workers, your equipment, your inventory and your property, but protection against potential lawsuits is also crucial. Bed and breakfasts of all colors and shapes can be sued, so don’t risk not having coverage.

How Much Does Bed and Breakfast Insurance Cost?

Truthfully, it depends. On quite a few things. B&B owners typically pay within the $1,500 to $5,000 range annually in combined liability insurance, workers’ comp, and more. But a small B&B with a single guest room and few or no additional employees will pay somewhere on the lower end of that scale, while large-capacity B&Bs with more employees will pay somewhere on the higher end.

Of course, it’s hard to offer an average figure, since each bed and breakfast is unique. But really, it all depends on a number of factors, like:

  • The type of bed and breakfast: This involves more than just if the interior has the minimalistic black-and-white-only look or is filled to the brim with little cat figurines (and real cats). The kind of equipment your B&B uses and the specific services offered will affect the risk involved in operations. Obviously, more danger means more money for insurance.
  • The location of the bed and breakfast: Larger cities tend to have higher costs for insurance, but it goes beyond that. Depending on where you are in the country, your location may be subject to various weather-related risks. Bed and breakfasts along the Atlantic Coast, for example, may have premiums up to 20% higher due to risk of hurricane damage.
  • The number of employees: The more you've got, the more workers' comp you’ll need. Simple as that.
  • How much business you generate: Premiums are calculated based on business projections for the upcoming year. If your workload doubles, so will your premium, most likely.

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Top 5 Business Insurance Claims

From potential injuries to property damage and lawsuits, business insurance is definitely a must-have. In order to keep all operations running smoothly, you’ll need to consider not only the risks unique to your trade, but also those that apply to all kinds of businesses. Here’s a quick look at the most common business insurance claims across the board:

  • Theft/Burglary: Whether they’re after money, merchandise, your company vehicles or anything else, thieves and burglars commonly target businesses. Anything you have that could be stolen is worth protecting—before ever opening your doors to the public.
  • Weather-related damage: Windstorms and hailstorms create the type of weather damage most often reported by businesses across the map. Whether it’s shattered windows, broken signage, destroyed products or anything else, Mother Nature can wreak havoc when she gets angry. Plan for disasters before they happen, and secure coverage up front.
  • Fire damage: Another common/costly claim is fire damage. Be it destruction caused by natural wildfires or resulting from employee negligence (such as with a kitchen fire), these disasters can be devastating. Fire damage can result in lost property, inventory, and even revenue, especially if your business is forced to close. Also, fires are obviously a huge hazard for your workers and customers alike. Take as many proactive measures as possible, such as installing sprinkler systems and extinguishers.
  • Employee injury: Even the most well-trained employees on record run the risk of getting injured on the job, regardless of the line of work they’re in. Employees may be injured while carrying out daily tasks, due to the negligence of a coworker, while making service deliveries, or in a myriad of other ways. Protecting your workers with workers’ comp is crucial, not to mention mandatory in most states.
  • Customer injury: Of course, your business’s customers are also at risk of injury while on your property. Slips and falls are some of the most commonly reported business insurance claims, but customers can also be injured due to unsafely stocked shelves, employee negligence, faulty products, and much more.

Top 5 Business Insurance Discounts

Owners of businesses of every size, color, and flavor love scoring discounts however they can. And fortunately, there are some discounts out there to help obtain a significantly lower premium, like:

  • The safety discount: Insurance companies love working with clients who put safety first. Put practices in place to keep your employees, equipment, and physical office space as safe as possible, and you're likely be rewarded by your insurance company. Installing sprinkler systems and burglar alarms are just a couple of examples of easy ways to score this discount.
  • The quality discount: Establishing a track record of quality goods, services, and customer interactions will not only keep your business running strong, but also help reduce your insurance costs. Essentially, keeping your clients happy is the key to keeping your insurance company happy, and they just might slash your premium as a thank-you in return.
  • The low claims history discount: Along the same lines as maintaining a safe and efficient business, having a low claims record is another way to seriously please your insurance company—and over time they may reward you for it. Plus, if you ever need to switch insurance policies or companies, having a low or even squeaky-clean claims record will definitely help you land a lower premium.
  • The professionalism discount: Sometimes insurance companies send out inspectors to observe your business during a typical day of operation. If your equipment is clean and well-maintained, your employees are following necessary safety protocols, and your customers/clients seem happy, you’ll get a good report. A favorable evaluation could reward you with a reduced premium. 
  • The bundle discount: Purchasing multiple types of insurance with the same company is a tried and true way to save money, but so is purchasing specialty insurance packages. These packages, made up of multiple policies tailored to a specific kind of business, are designed to save you money—and just generally make life easier. And since they exist, you might as well take advantage.

How to Find the Best Bed and Breakfast Insurance

In order to get the protection you need (and deserve), you’ll want to work with a trusted expert. Independent insurance agents will not only know where to find the best coverage and price, but also help to make sense of the fine print.

Consider your business’s unique needs, then connect with an agent to help you take it from there. Have a list of your specific concerns and desires handy before you reach out, to help the process run even more smoothly.


Save on Business Insurance

Our independent agents shop around to find you the best coverage.

Compare Bed and Breakfast Insurance Quotes with an Independent Insurance Agent

We all know how valuable your time is, so why spend it doing all the hard work yourself? From business insurance packages to special add-on policies, our expert independent insurance agents will help you determine which types of coverage make the most sense for you and your new business. 

Our independent insurance agents stay on top of the insurance industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.

They’re not just there at the beginning, either. If disaster strikes, your agent will be there to help walk you through the claims process and make sure you are getting the benefits you’re entitled to. Now that’s thinking ahead.

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