Insurance policy

This week we are talking about the least glamorous part of building a micro-resort, and the one that decides whether you keep everything you built.

Insurance.

So I brought in someone who lives in this world every day.

Our guest is Jessica Villarreal, CLCS, a Commercial Lines Producer at HUB International. She specializes in commercial coverage, which makes her exactly the person you want in your corner when you are insuring something that does not fit in a standard box.

And micro-resorts rarely fit in a standard box.

Domes. Cabins. Treehouses. Hot tubs. Saunas. If you are building or operating a unique stay, this conversation could save you more money than any pricing tool ever will.

Let's get into it.

Anastasia: Jessica, let's start with the mistake I see most often. A brand new host buys a short-term rental property, keeps their homeowners policy, adds a little rider, and thinks they are covered. Where does that go wrong?

Jessica: The problem is that a micro-resort is a business, not simply a home where someone occasionally stays. You have paying guests, commercial activity, amenities, employees or contractors, and often multiple structures. A homeowners policy may exclude or severely restrict business activity and short-term rentals.

Owners also sometimes assume the booking platform’s protection replaces their own insurance. It does not. That coverage may be limited, conditional, or secondary. Your insurance needs to match what you are actually operating.

Anastasia: So what should a micro-resort actually be carrying instead? Walk us through the coverage that forms the foundation.

Jessica: The foundation is usually commercial property and general liability coverage written specifically for short-term lodging or hospitality.

Property coverage protects the buildings, furnishings, equipment, and other physical assets. General liability responds when a guest alleges bodily injury or property damage. From there, we look at business interruption, equipment breakdown, crime, cyber, workers’ compensation, commercial auto, and umbrella or excess liability.

The exact structure depends on the property because a two-cabin retreat and a 20-unit resort with a pool and employees are very different risks.

Anastasia: Let's talk about the fun part of our properties, which is also the scary part for you. Hot tubs, cold plunges, saunas, fire features, water. The exact amenities that sell a unique stay are the ones that create risk. How do underwriters look at those?

Jessica: Underwriters want to know whether the amenity is professionally installed, properly maintained, clearly disclosed, and operated with appropriate safety controls.

They may ask about fencing, lighting, slip-resistant surfaces, water testing, temperature controls, inspection logs, waivers, posted rules, emergency equipment, and how quickly someone can respond if something happens.

Amenities do not automatically make a property uninsurable, but surprises make underwriters nervous. Tell your broker everything. I would much rather explain a firepit or cold plunge before placing the coverage than discover after a claim that the carrier never knew it existed.

Anastasia: Say a pipe bursts or a fire takes a unit offline for three months. The property gets repaired eventually, but I am earning nothing while the doors are closed. What actually covers the income I lose during that gap?

Jessica: That is where business interruption, also called business income coverage, comes in. It can replace covered lost income and help pay continuing expenses after covered physical damage shuts down part or all of the property.

The key phrase is “covered physical damage.” If the cause of loss is excluded, the related income loss may also be excluded. We also need to select an adequate restoration period and calculate income using real occupancy, seasonal rates, and projected growth. A busy resort cannot afford to base that limit on last year’s quieter numbers.

Anastasia: A lot of these properties live in beautiful, risky places. Wildfire country, flood zones, the middle of nowhere. How should an operator think about location risk, and does being remote change what they can even get covered?

Jessica: Absolutely. Distance from a fire station, road access, water supply, wildfire vegetation, coastal wind exposure, flood zones, construction type, and even the availability of local contractors can affect coverage and pricing.

Flood and earth movement are commonly excluded from standard property policies and may require separate coverage. Flood insurance is available to businesses, but owners need to understand its limits and what it does not cover.​

Before buying land, talk to a broker. Insurance feasibility should be part of due diligence, just like zoning, utilities, and permitting. A gorgeous remote location may be insurable, but possibly with higher deductibles, narrower coverage, or multiple policies.

Anastasia: Most micro-resorts run lean, but sometimes there is someone on the property. A cleaner, a handyman, a caretaker. What coverage do operators overlook when it comes to the people working for them?

Jessica: Workers’ compensation is a big one. Owners sometimes call everyone an independent contractor, but that label alone does not determine their legal status or eliminate the exposure.

We need to understand who is doing the work, who directs it, whether they carry their own insurance, and whether certificates and contracts are on file. Employment practices liability should also be considered because allegations involving discrimination, harassment, retaliation, or wrongful termination are generally not what a standard general liability policy is designed to cover.​

Anastasia: Let's talk about the topic that keeps operators up at night. The lawsuit. A guest gets hurt, or worse. What is the layer of protection people underestimate here?

Jessica: Umbrella or excess liability coverage. Your general liability policy has a limit, and a serious injury can exhaust it faster than people realize. An umbrella provides another layer above scheduled underlying policies.

But it is not just about purchasing a big number. We need to make sure the underlying policies coordinate correctly and that an exclusion in the primary policy does not leave a hole underneath the umbrella. The right limit depends on the amenities, number of guests, revenue, property values, ownership structure, and overall exposure.

Anastasia: What is hiding in the exclusions? Give me the coverage surprises you see people discover far too late, the things that make a policy not pay.

Jessica: Some of the biggest surprises involve flood, earth movement, wind or named storms, water damage, mold, sewer backup, vacancy, animals, assault and battery, liquor liability, communicable disease, recreational activities, and certain amenities.

Another major issue is inaccurate information on the application. If the policy says there is no pool, no fire feature, and no commercial activity, but the website advertises all three, that can create a serious problem.

Do not look only at the premium and coverage limits. Review the exclusions, deductibles, conditions, valuation method, and definitions. The least expensive policy can become the most expensive one you ever buy if it does not respond.

Anastasia: Let's talk about protecting the person, not just the property. How does the way someone owns a micro-resort, the LLC, the structure behind it, affect whether a lawsuit can reach their personal assets? And how does insurance work alongside that?

Jessica: An LLC can help separate business and personal assets, but it is not an invisible shield. Owners need to maintain the entity properly, keep business and personal finances separate, use appropriate contracts, and follow their attorney’s guidance.

Insurance and legal structure work together. The entity should be correctly named on the policy, and other relevant owners, management companies, or entities may need to be included. I help build the insurance side, but I always want the client’s attorney and accountant involved in decisions about ownership and asset protection.

Anastasia: As people grow from one unit to a small portfolio, does the insurance approach change? What should someone do differently once they are managing several properties?

Jessica: Yes. Growth creates more value, but it also creates more moving parts. We start looking at whether the properties should be placed on one coordinated program, how the ownership entities connect, whether limits are shared, and whether one loss could affect multiple locations.

Operators also need consistent safety standards, contracts, incident reporting, maintenance logs, vendor requirements, and renewal information across the portfolio. Once you have several locations, insurance should become part of your overall risk-management strategy, not a separate policy purchased property by property.

Anastasia: When someone buys coverage directly online in ten minutes versus working with a broker like you, what are they actually giving up?

Jessica: They may be giving up advice, advocacy, and someone who understands the complete operation.

A website can quote the information entered, but it may not ask the question you did not know mattered. A good broker looks at how the property is built, marketed, managed, staffed, and used. We compare options, explain tradeoffs, coordinate policies, help prepare the submission for underwriters, and advocate for the client when a claim or coverage question arises.

I am not here just to sell someone a policy. I want to understand what they built and help protect where they are going.

Anastasia: Paint me the picture. If someone came to you and said, set me up the right way, I want myself and my micro-resort fully protected, what does that ideal stack look like? What are all the pieces, and how do they work together?

Jessica: There is no policy that makes someone fully protected from every possible event, but we can build a strong, coordinated program.

That may include:

• Commercial property, including buildings, furnishings, outdoor property, and equipment

• General liability written for the actual lodging operation and amenities

• Business income and extra expense

• Equipment breakdown

• Flood, windstorm, earthquake, or wildfire coverage where needed

• Sewer backup, utility interruption, and service-line coverage

• Umbrella or excess liability

• Workers’ compensation and employers liability

• Employment practices liability

• Cyber liability and data breach response

• Crime coverage

• Commercial auto or hired and non-owned auto

• Liquor liability if alcohol is sold, served, or included

• Appropriate coverage for management services, special events, or recreational activities

Then we support the insurance with strong contracts, proper entities, documented safety procedures, employee training, vendor requirements, and a plan for responding to incidents.

The goal is not simply to collect policies. It is to make sure the pieces work together.

Anastasia: Give us a crazy claim scenario. Something that sounds ridiculous but could absolutely happen at a micro-resort. What insurance would actually kick in?

Jessica: You’re never going to believe me, but ask anyone who works in hospitality insurance and they’ll have more than enough crazy stories to share! It’s practically why I started Jessica’s Risky Business.

Picture this, it's a Friday night and a bachelorette group checks into your cutest cabin. There is prosecco, matching pajamas, a hot tub, and someone has brought an emotional support goat wearing a tiny pink sash.

They decide the firepit needs to be closer to the hot tub because the lighting is better for TikTok. A towel catches fire, the flames damage the deck and cabin, the sprinkler system floods the furniture, and one of the guests slips while running outside. Now you have property damage, an injured guest, and your most popular cabin is closed during peak season.

All because Becky wanted better lighting for the s’mores boomerang.

Depending on the policy terms, commercial property could respond to the damage to the cabin and its contents. General liability could respond to the injured guest’s claim. Business income coverage could help replace covered revenue while the cabin is being repaired. If the lawsuit becomes larger than the general liability limit, umbrella coverage could provide another layer of protection.

And the goat? We will discuss him at renewal.

It sounds outrageous, but hospitality claims often start with one very normal decision followed by five spectacularly bad ones. That is why your coverage cannot be built one policy at a time. The whole program needs to work together when your guests decide to turn their weekend getaway into an episode of Risky Business.

Anastasia: Last question. Where can readers find you if they want to talk through their own property?

Jessica: You can find me on LinkedIn under Jessica Villarreal Lentz or reach me at Jessica.Villarreal@HUBInternational.com. You can also listen to me on Jessica’s Risky Business, available on Spotify and Apple Podcasts.

I am always happy to learn about an interesting property, and micro-resorts are definitely interesting! Bring me the domes, cabins, treehouses, hot tubs, and big ideas. Let’s make sure the insurance is as thoughtfully designed as the guest experience.

The least exciting line item in your budget might be the most important one. You can build the most beautiful cabin in the world, but if the wrong policy is sitting behind it, one bad night can undo everything.

The best time to fix your coverage is before you need it. The worst time is the morning after.

Build beautifully, and protect it.

That’s all for today, 

Till next week, dear readers. 

Anastasia