The “have to haves” of Insurance for a Bed and Breakfast or GUEST HOUSE

There is no doubt that as the B&B and GUEST HOUSE industry grows in South Africa, so too does the amount of owners who rely on the establishment as a primary or sole source of income or a supplement to an inadequate pension.

So what then does this mean if any numbers of losses, specific to this industry were to happen, and how would this affect the owner of the establishment and their income? The answer to this is simple, without the correct insurance the owner would suffer financially.

Guest House or Bed and Breakfast owners can be classified as:

  • B&B Definition and Guest House Definition: a building which is used for human habitation, has not more than one kitchen and is occupied by the owner and in which persons are accommodated on a temporary basis.
  • B&B Definition: a Bed and Breakfast accommodation is usually provided in a family (private) home and the owner/manager lives in the house or on the property. Breakfast is usually served. Bathroom facilities may or may not be en-suite and/or private. In general, the guest shares the public areas with the host family.
  • Guest House Definition: a Guest House is either a converted house, manor, etc adapted to accommodate overnight guests or it may be a purpose built facility. A guest house is run as a commercial operation and is often owner-managed. A guest house has public areas which are for the exclusive use of the guest. The owner/manager either lives off-site, or in a separate area within the property.
  • B&B Definition and Guest House Definition: a small house on the same property as a larger main house, used as for guests.
  • B&B Definition and Guest House Definition: a free-standing hotel unit, often like a cottage, rented to guests.
  • B&B Definition and Guest House Definition: a small house or cottage adjacent to a main house, used for lodging guests.

Many owners of such GUEST HOUSESs have not been informed of the implications of incorrect insurance on their guest house. It is only after a loss has occurred, when it is too late that the consequences are discovered.

“What do you mean my loss of revenue at my B&B isn’t covered? I have a commercial policy”

“What do you mean my personal policy doesn’t cover this liability claim for R8m against me?”

If the above seems a little far fetched please visit here for some true examples.

So having the incorrect insurance can be devastating, for many GUEST HOUSESs owners their GUEST HOUSE represents their main or sole source of income, as well as the family home. The loss of either can be shattering and with the risks so high it is not worth taking the chance with incorrect guest house insurance cover.

So what’s the answer?

Insure your guest house with a specialist policy, specifically designed for the bed and breakfast and GUEST HOUSE industry. A policy that understands the risks and caters specifically for them, in other words takes care of the “The Have to Haves of GUEST HOUSE Insurance”.


The most important of them all is Public Liability cover. There is still a school of thought that thinks cover of R500, 000 or R1m is enough for a GUEST HOUSE. As there are several liability claims outstanding against GUEST HOUSESs in South Africa right now, it’s clear that any guest house owner with a R500,000 liability limit could be in serious trouble.

It is not just the size of the claim but also the legal cost incurred in defending it – a recent claim settled at R300, 000 had legal expenses of over R150, 000.

So how much liability cover should you have? This is where your guest house insurance advisor needs to come to the party and guide you.
It is worth stressing also, that under liability cover many claims are repudiated due to the non-disclosure of all the activities and facilities offered by the establishment. Non disclosure means no claim.


Big risk number two is probably Loss of Revenue. Aside form the normal risks businesses face guest houses have some very specific and unique risks that could see the business lose income. What would happen if a murder took place at the establishment? What impact would that have on reservations? What would happen if a guest house run by a husband and wife team saw the death of one of the partners? How would that affect the business? And so the list of “different” risks goes on.


Policies designed specifically for guest houses understands and deals with the risks that are unique to guest houses, the incorrect over again means no claims. Just a few example of what makes insuring guest houses so unique:

  • Coping with restrictions regarding “forcible and violent entry”. As far as theft is concerned most guest house will agree that it’s almost impossible to comply with this condition. Guests come and go and leave doors unlocked or even open. Another implication of this condition is theft by guests – and sadly this does happen – would also not be covered.
  • ‘’Bilking’’ – where the guest leaves without paying.
  • Accidental damage where guests damage contents in some way.
  • Motor insurance. The last thing a guest house owner needs to hear (because he or she has “saved money” by opting for cheap personal motor insurance) is that neither the car nor the passengers are covered, as the vehicle was being used for business and not for personal use. That the insurers thought they were covering.

In summary – personal policies do not cover guest houses in a sufficient manner; one has to ask why insure your guest house at all, if it is with the wrong cover. In reality the wrong cover is comparable with having no insurance at all apart from a wasted expense.

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