Hospitality Insurance Market Overview: Liability Trends, Emerging Exposures, and Placement Strategies

Liability Trends   

Hospitality Liability risks remain under pressure as carriers contend with rising claim severity, social inflation, and a growing range of operational exposures. While market conditions have stabilized in some areas, underwriting discipline remains strong, particularly for businesses involving alcohol sales, late-night operations, lodging, and experiential entertainment. 

Underwriters are placing increased emphasis on operational details that help accurately assess exposure, including: 

• Percentage of alcohol sales 
• Restaurant type and service model 
• Hotel class and amenities 
• Entertainment offerings 
• Hours of operation 
• Prior loss history 

As a result, accurate risk classification and complete underwriting information have become increasingly important to securing favorable terms. 

Liquor Liability 

Liquor Liability remains one of the primary drivers of Hospitality Insurance pricing and coverage availability, and market conditions can vary significantly by jurisdiction. Markets such as South Carolina, Alabama, Louisiana, and Washington, D.C. remain among the most challenging due to legal environments, claim severity, and capacity constraints. However, recent legislative reforms in South Carolina have increased market capacity for bars, taverns, and restaurants with higher alcohol receipts. Similar reforms in Alabama have also helped improve rating conditions and market opportunities. 

Over the past several years, carriers have reduced their participation in the Liquor Liability market as claim severity has increased. What was once a routine coverage extension on many General Liability policies has evolved into a specialized underwriting exercise requiring detailed supplemental information and greater scrutiny of operations. 

Several trends are contributing to current market conditions: 

• Reduced carrier capacity for Liquor Liability accounts 
• Increased use of Liquor Liability supplemental applications 
• Double-digit rate increases in many segments 
• More restrictive underwriting for bars, taverns, and late-night operations 
• Greater scrutiny of prior claims and risk controls 

Coverage limits are also tightening. Many carriers that previously offered $1 million/$2 million Liquor Liability limits now commonly deploy $1 million/$1 million limits. Risks with prior losses may only be offered $500,000/$500,000 limits or state-required minimums. 

These changes can create challenges in the Excess Liability marketplace, where many excess carriers prefer underlying Liquor Liability limits of $1 million/$2 million before attaching excess coverage.  

Rising claim severity continues to pressure the Hospitality Insurance market. According to Marathon Strategies, nuclear verdicts, defined as jury awards of $10 million or more, reached record levels in 2025, while “thermonuclear verdicts,” or awards exceeding $100 million, continued to increase. As verdict severity grows, carriers are responding with tighter underwriting standards, reduced capacity, lower available limits, and ongoing rate pressure across Liability lines, particularly for Hospitality risks involving Liquor Liability, Assault & Battery, and other high-severity exposures. 

Despite these challenges, solutions are available for many Hospitality risks. Detailed operational information, strong risk management practices, and complete supplemental applications can help improve market access and underwriting outcomes. 

Assault & Battery and Firearms  

Hospitality operators that serve alcohol often face heightened Assault & Battery and firearm-related exposures. As claims have become more severe, carriers have increasingly responded with sublimits, exclusions, or separate underwriting requirements. 

Underwriters commonly evaluate: 

• Crime scores surrounding the location 
• Hours of operation 
• Type of clientele 
• Alcohol sales percentages 
• Security procedures 
• Prior Assault & Battery claims history 

Coverage may be offered on a sublimited basis depending on the risk profile. Firearms exclusions are also becoming increasingly common and should be reviewed carefully alongside Assault & Battery provisions. 

For brokers and agents, evaluating these limitations early in the placement process is critical. A policy may include General Liability coverage but significantly restrict Assault & Battery-related claims through sublimits or exclusions. 

In many cases, coverage availability is influenced by factors such as operating hours, security measures, clientele demographics, loss history, and online presence. Underwriters are increasingly reviewing websites, promotional materials, and social media accounts to better understand operational exposures and venue characteristics. 

Despite these liability challenges, solutions are available. Working with experienced Hospitality Insurance specialists and providing detailed underwriting information can help brokers and agents access markets for hard-to-place risks.  

Emerging Exposures 

Underwriters are increasingly focused on emerging risks that can influence coverage availability, eligibility, and pricing. These exposures often require additional underwriting review and may introduce considerations not addressed by standard risk management practices. 

Human Trafficking 

Human trafficking has emerged as a major underwriting concern. Many carriers now apply human trafficking exclusions across multiple industries. However, within the hospitality sector, underwriters are increasingly evaluating prevention and reporting protocols as part of eligibility requirements. Motels, hotels, and other lodging operators may be asked to demonstrate: 

• Employee training programs 
• Written reporting procedures 
• Incident escalation protocols 

In some cases, carriers may decline to quote risks that cannot demonstrate adequate controls, making documented prevention and reporting procedures increasingly important. 

THC and CBD Beverages 

Breweries, restaurants, bars, and retailers are increasingly incorporating THC- and CBD-infused beverages into their offerings, creating new conversations around impairment-related liability. Future Market Insights projects the cannabis drinks market to grow from $1.37 billion in 2026 to $23.8 billion by 2036.  

As these products become more prevalent across hospitality venues, they introduce exposures that differ from traditional Liquor Liability risks. Brokers and agents should carefully evaluate whether current policies adequately address these evolving operations. 

VR and Immersive Experiences  

Hospitality operators are increasingly combining food and beverage offerings with experiential entertainment to attract customers. While concepts such as axe throwing, rage rooms, and golf simulators gained popularity in recent years, underwriters are seeing more venues incorporate immersive virtual reality (VR) and interactive gaming experiences. These attractions can introduce participant injury, premises liability, and operational exposures that may require separate rating, underwriting review, or specialized coverage solutions. 

As demand for immersive entertainment grows, these concepts are expected to become more common within hospitality venues. Market Intelo estimates the global location-based immersive entertainment venue market was valued at $7.4 billion in 2025 and is projected to reach $31.7 billion by 2034, with VR arcades representing the largest venue segment. Brokers and agents should evaluate whether insurance programs properly contemplate interactive gaming and participant-based exposures. 

Vacation and Short-Term Rentals  

Vacation rentals have traditionally centered on individual homes and condominiums. Increasingly, however, underwriters are seeing investors acquire entire condominium complexes and operate them as short-term rental businesses. In these situations, the exposure may more closely resemble a hotel than a traditional rental property, creating additional underwriting and coverage considerations. 

Coverage challenges often arise when determining whether a property should be insured under a Personal or Commercial Insurance policy. Factors that commonly influence underwriting include: 

• Owner occupancy 
• Frequency of rental activity 
• Ownership structure 
• LLC versus individual ownership 
• Number of units under common ownership or management 

As these operations become larger and more sophisticated, proper classification becomes increasingly important. Detailed supplemental applications can help underwriters determine whether a risk should be evaluated as a traditional short-term rental or a hospitality operation with hotel-like exposures. 

Cyber Liability and Data Breaches  

As Hospitality operations become more technology-dependent, cyber exposures are becoming more difficult to ignore. Cyber security firm Trustwave reports 31% of hospitality organizations have experienced a data breach, and 89% of those organizations reported experiencing multiple breaches within a single year. 

Hospitality businesses often rely heavily on: 

• Point-of-sale (POS) systems 
• Online reservations 
• Loyalty programs 
• Digital payment processing 
• Employee management platforms 

As these systems become more integrated into daily operations, the impact of a cyber incident can extend well beyond the loss of customer data. 

Many carriers now include limited Data Breach enhancements within Commercial General Liability packages. However, these endorsements frequently feature minimal limits that may not adequately address a significant loss. As a result, brokers and agents should evaluate whether standalone Cyber Liability coverage is more appropriate than relying solely on embedded coverage enhancements. Employment Practices Liability Insurance (EPLI) should also be reviewed separately, as embedded coverages may not adequately address workplace-related exposures. 

Opportunities

Despite ongoing Liability challenges, opportunities remain available for well-managed Hospitality risks. The hotel segment, in particular, is attracting renewed carrier interest as Property market conditions improve. Characteristics that may help position hotel risks favorably include: 

• Interior corridor hotels 
• Boutique properties 
• Strong online reviews 
• Well-maintained locations 
• Demonstrated risk management programs 

At the same time, evolving hospitality concepts are creating opportunities for specialized coverage solutions. For example, glamping operations, which combine traditional camping with upscale accommodations and amenities, have gained popularity in recent years. Unlike traditional campgrounds or hotels, these risks often blend lodging, food service, retail operations, and recreational activities, requiring a more tailored underwriting approach. Through Atain, Burns & Wilcox offers exclusive insurance solutions for many of these unique Hospitality risks, helping brokers and agents access coverage for operations that may not fit traditional hospitality programs. 

Tips for Brokers and Agents 

As Hospitality risks become more complex, complete submissions and proactive underwriting discussions can help improve both coverage outcomes and turnaround times. Brokers and agents are encouraged to:  

1. Submit complete supplemental applications. Details regarding alcohol sales, security procedures, entertainment exposures, and hours of operation are essential for underwriting review. 
2. Clearly separate food and liquor sales. Misclassifying revenue remains one of the most common submission issues. 
3. Document risk management practices. Provide specific examples rather than general statements. Explain training programs, security protocols, incident procedures, and operational controls. 
4. Review Assault & Battery, Firearms, and Liquor Liability limitations carefully. Sublimits and exclusions can significantly impact claim outcomes. 
5. Look beyond traditional Hospitality risks. Emerging exposures such as human trafficking controls, THC/CBD beverage sales, and VR experiences should be discussed upfront, as they may introduce underwriting considerations not addressed by standard applications. 
6. Assess standalone Cyber and EPLI coverage needs. Small coverage extensions may not adequately address significant losses. 
7. Monitor online presence and marketing materials. Carriers increasingly review websites, social media channels, online reviews, and promotional content during underwriting. 
8. Leverage specialized Hospitality expertise. Burns & Wilcox Hospitality Insurance specialists can help identify coverage limitations, navigate complex underwriting requirements, and access solutions for challenging or evolving hospitality risks. 

As Hospitality businesses expand into new services, technologies, and operating models, insurance programs should evolve as well. Clear communication, complete submissions, and early identification of emerging exposures can help brokers and agents secure more effective coverage solutions and improve underwriting outcomes for their clients. 

Contributors: Larry Paulaski, Regional Vice President, Southwest, Burns & Wilcox, Scottsdale, AZ; Nicholas Enriquez, Associate Managing Director, Burns & Wilcox, Brokerage Division, Scottsdale, AZ; Ashley Poe, Associate Managing Director, Underwriter, Commercial Insurance, Burns & Wilcox, Charlotte, NC; Nick Caletri, Senior Underwriter, Commercial Insurance, Burns & Wilcox, New Orleans, LA   

This commentary is intended to provide a general overview of the issues contained herein and is not intended, nor should it be construed, to provide legal or regulatory advice or guidance. If you have questions or issues of a specific nature, you should consult with your own risk, legal, and compliance teams.