Bed & Breakfast Program Your General Liability Insurance - The Difference Between Auditable and Non-Auditable General Liability Insurance We received several inquiries from Innkeeper asking us how their General Liability is calculated on their Innkeepers policy. There are a number of ways to calculate the liability premium that Innkeepers are charged by their insurance carrier. The method that we use is based on the number of rooms, as we feel this is the fairest way since the Innkeeper only has a maximum number of guests that could spend the night at their Inn. This calculation "the number of rooms" is non-auditable by the general liability insurance carrier. It makes no difference on how much revenue you make, per room, our concern is how many people are staying there. The next method that we have seen, by some of our competitors, is a gross receipts basis, where they calculate the liability based on the estimated revenue that the Inn generates. This method is an auditable method, meaning that at the end of the policy period, they will ask you for a statement on your gross receipts and adjust your liability rate accordingly. Using this method generates more premiums for the insurance carriers since the exposure ("number of people") has not changed. If you increase your room charge during the policy period, you can expect an audit form from the insurance company asking you to disclose your room receipts. They will calculate against your original estimate and then send you a bill or a refund for the difference. Also if you engage in other activities or services such as catering, tours, retail sales etc., these activities also have premium costs associated with them. By keeping the room rate constant and non-auditable it makes insurance cost more predictable for the Innkeeper.