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Hospitality Insurance FAQs

At Mitchell J. Pies insurance company, we do all we can to educate you so that you can make sound decisions. We have listed below some common questions our clients ask us. Click the arrow to see a brief answer and explanation.

Do you have any other questions in addition to the ones listed below? Would you like to review your current insurance policy? Would you like further explanation on one of these topics? Get in touch with our team today, and we will be more than happy to help you out. Call us at (314) 952-3605 or send us an email at

Victorian Manor

How does owning a historic building affect my insurance?

Rebuilding or renovating a historic building requires experienced craftsmen as well as hard-to-find materials, such as vintage stone and glass. In addition, any historic renovation project requires a meticulous approach to details.

These factors naturally increase the cost of rebuilding. Your insurance should also include the replacement cost coverage. We also recommend that you have an ordinance and law endorsement with adequate limits of insurance.

Replacement Cost

Cost to replace damaged property with like kind and quality without depreciation.

Ordinance and Law

This endorsement protects the insured when there is damage to a building that requires upgrades due to new building codes. Depending on local zoning requirements the owner of a building may be required to modify, change, or add to the damaged and/or damaged portion of the building. For example, a new ordinance might be passed requiring all guest rooms to be sprinklered. If the insured building was approved for occupancy prior to the new requirement and does not have a sprinkler system, it need only to comply when there is damage to the building. Because the sprinkler system was not a part of the building, it would not be covered without the Ordinance and Law endorsement. This endorsement commonly includes separate limits for the damaged portion of a building, the undamaged portion of the building, and debris removal.

Man fly fishing on a river

Do I have liability exposure when referring guests to guide services?

There is always a risk that a client’s expectations are not met (i.e. not catching a fish, bad service etc.…). Not meeting expectations can be remedied and or managed with minor consequences compared to a client being seriously injured or losing a life. It is realistic that if a guest that you have referred to a guide is injured or killed that there will be financial consequences. If you are not in the guide business it is likely that your insurance policy excludes coverage for this risk.

How can you minimize your risk?

It is highly recommended that you require the guide to have a Commercial General Liability policy with an A or better rated company, with a minimum limit of $2,000,000 liability coverage or $1,000,000 liability coverage with a $1,000,000 umbrella. It is equally important that you be listed as an additional insured on the guides policy. Additional insured status will give you defense coverage in the event of a claim. Additional insured status will also require that you be notified if there is a lapse in coverage or if the policy is canceled.

bride and groom with bouquet

How do I minimize our exposure when we host special events?

Apart from knowing how or if your insurance policy affords coverage for special events it is in your best interest to require the following:

  • Guests to have a general liability policy with an A rated insurance company with a minimum of $1,000,000 per occurrence of liability coverage or $2,000,000 per occurrence if alcohol is served and list you as an additional insured.
  • All subcontractors (caterers, valets, etc.) to have a general liability policy with an A rated insurance company with a minimum of $1,000,000 per occurrence of liability coverage or $2,000,000 per occurrence if alcohol is served and list you as an additional insured.
  • Guests and subcontractors to have a liquor liability policy with an A rated insurance company with a minimum of $2,000,000 per occurrence of liquor liability coverage and a $1,000,000 umbrella policy when alcohol is served and list you as an additional insured.
man and woman handshake

What are the typical property insurance settlement options available?

The three most common settlement options are:

  • Actual Cash Value (ACV): An ACV is a settlement that is based on the depreciation of a certain damaged property.
  • Agreed Value (AV): An AV is a fixed agreement between an insurance company and an insured party.
  • Replacement Cost (RC): An RC is essentially the necessary cost to replace damaged property with materials of the same value.

Regardless of what settlement option is stated on your insurance policy, there are provisions that could have an implication on the final settlement. One example of a provision is coinsurance.


A provision requiring the property is adequately insured. If the property is not insured to the correct value a “coinsurance penalty” will be applied to the claim. Example: At the time of the claim the adjuster determines that the replacement of the building will cost $250,000. The policy declarations state that there is an 80% coinsurance clause. The adjuster takes 80% of the $250,000 and knows the insured needs at least $200,000 of coverage stated on their declarations page to be adequately insured and avoid any coinsurance penalty.

flooded house

Do I need flood insurance?

Flooding occurs in all states and can be caused by dams or waterways being compromised, hurricanes, and storms. To ensure that your business is protected from the potential damage caused by flooding, you have the option of obtaining flood insurance.

Flood Insurance

According to, “Flood insurance covers direct physical loss caused by flood. In simple terms, a flood is an excess of water on land that is normally dry. The official definition used by the National Flood Insurance Program is "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property).”

Flute glasses and champagne bucket

Do I need liquor liability insurance?

If you are serving any type of alcoholic beverage you should have liquor liability coverage.

Most insurance policies have a liquor liability exclusion stating in part that the sale or distribution of alcoholic beverages is excluded from coverage. The definition of sale seems obvious; that of making a profit. On the other hand, the definition of distribution could be interpreted as providing for profit or more broadly defined as providing with or without profit. Many hospitality businesses provide a glass of wine or beer as a complimentary service without profit. The broader definition would potentially exclude coverage for the serving (distribution) of alcoholic beverages.

It is imperative for the business providing complimentary service that the policy include “Host Liquor” coverage and that the exclusion does not apply to complimentary service. If the business is making any profit including special promotions that include an upcharge for alcoholic beverages a liquor liability policy and/ or endorsement should be obtained to provide coverage. Regardless of coverage it is required that all local, state and federal laws are adhered too.

black umbrella in front of tree

What is an Umbrella Policy and why should our business obtain an umbrella?

What is an umbrella policy?

Umbrella policies provides liability coverage in the event the underlying coverage for the insureds primary policy is exhausted. Umbrella’s generally require that there be a minimum limit of liability on the underlying primary policy.

Why do I need an umbrella policy?

In addition to having assets that include inventory and/ or property, many businesses have a future value in loyal customers. Dependence on ongoing wages and benefits can be significant. If a customer slips on a wet floor and is seriously injured, costs for medical, loss of income and other damages that exceed limits of liability on the primary insurance policy could easily force premature closure or sale. Umbrella’s are generally considered an inexpensive tool to add layers of liability protection from a catastrophic claim. Umbrella’s are highly recommended for both small and large businesses.

luxury mountain cabin

Can you insure vacation rentals?

Vacation rentals are a niche market within the hospitality industry and have a unique liability exposure. Although many companies write insurance within the hospitality industry there are only a select few that will write the vacation rental market. Yes, we have companies that will write vacation rentals.

Leavitt Recreation & Hospitality Insurance

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