Hoteliers are paying more for less casualty coverage, and the causes range from soaring jury verdicts to a lack of staff training, experts say.
Forty-three percent of hotel owners said insurance premiums are among their greatest financial pressures, according to a March survey by the American Hotel & Lodging Association. From Q4 2025 to Q1 2026, general liability rates were up by 5% to 15% for operators with favorable loss histories, and by 15% to 30% for those without, according to IMA Financial Group’s Q1 2026 hospitality market report. Umbrella and excess liability rates are up by 10% to 20%.
In addition, the carrier pool has shrunk from approximately 25 insurers five years ago to about 10 in 2026, with only three “real options” for hotel owners, said Paul DiBenedetto, franchise practice leader at insurance broker Hub International.
The unviable carrier options that remain for hotels are stripping out major coverages, including human trafficking, sexual abuse and molestation, and assault and battery, leaving hotels exposed to the very risks driving claims, according to DiBenedetto.
The casualty coverage market for hotels is “probably the toughest it’s ever been,” he said.
Mounting cost pressures
DiBenedetto and other hospitality experts shared how the insurance landscape is evolving and what hotels can do to combat the mounting pressure.
Years of underpriced policies, emerging liability risks and nuclear verdicts — jury awards exceeding $10 million — are driving claims higher, experts say. This happens as insurers’ liability cost claims outpace general inflation — called social inflation, according to the National Association of Insurance Commissioners.
On top of that, many hotels have been inconsistent about basic risk management, such as training staff, monitoring claims and fixing problems before they become lawsuits, DiBenedetto said.
Nuclear verdicts doubled nationally from 2023 to 2024, with total awards surging from $14.5 billion to over $31 billion, according to AHLA. Hotels, as public-facing businesses, are particularly exposed.
“Even things that were routine — a slip-and-fall, a trip-and-fall — are now six- and seven-figure settlements,” DiBenedetto said. “[Hotels] are seeing $5 million, $10 million claims on things that, historically, were $100,000 claims.”
Third-party litigation financing has accelerated the trend, according to NAIC, as outside investors fund lawsuits in exchange for a share of settlements or verdicts, which in turn drives up the cost and size of awards. Other factors include growing negative public sentiment toward corporations and desensitization to large jury awards, according to the Insurance Information Institute.
“As settlements and awards reach unprecedented levels, insurers are forced to raise premiums and limit coverage, leaving some hoteliers struggling to secure the coverage they need,” Chirag Shah, general counsel and executive vice president of policy, regulatory and legal affairs at AHLA, said in an email.
What hotels can do
The single most effective step hotels can take to reduce insurance costs is “training, training and more training,” DiBenedetto said.
Carriers now require annual, documented training on human trafficking, sexual abuse and slip-and-fall prevention — not just for managers, but for all employees, according to DiBenedetto.
Hotels with thorough training have lower premiums and better renewal results, while those that take a “laissez-faire approach” see the most claims and the highest increases, he said.
Underwriters are also scrutinizing public-facing information. DiBenedetto said he cannot get certain carriers to even look at a property with a rating lower than 3.5 on Tripadvisor. He recommended that brands ensure operators are checking their reviews, keeping guests happy and ensuring that those comments are “actually true, not a competitor.”
Beyond training, hotels should work with a broker who specializes in hospitality, as other brokers may sell policies with exclusions the buyer doesn’t know about, according to DiBenedetto and Jackie Collins, executive director and senior area vice president for Arthur J. Gallagher & Co.’s real estate and hospitality practice.
Hotels should also take an active role in the process by creating submission documents, providing complete loss information and meeting with underwriters directly, according to Collins.
“No one can sell the hotel company to the underwriter better than the hotel company can,” she said.
But hotels should not buy on price alone. Many hoteliers cut property values or business interruption coverage to save money, which can backfire when claims exceed coverage limits. It’s worth it to pay a little more for additional coverage, experts say.
Rather than focusing on the premium alone, hotels should focus on the total cost of risk, including uninsured losses.
“When one of these nuclear claims hits, it will put you out of business,” DiBenedetto said.
Franchisors are also pressuring franchisees to carry adequate coverage, he added. If franchisees don’t carry the required coverage, franchisors are purchasing policies on their behalf and billing them for it. Others, meanwhile, are considering punitive action, with DiBenedetto citing an instance in which a franchisor threatened to cut a franchisee off from its reservation system.
Insurance broker Hub uses the leverage of large franchise systems, such as Wyndham Hotels & Resorts’ roughly 9,000 hotels, to negotiate better rates and broader coverage with carriers, DiBenedetto said. Each franchisee is still treated as an independent account, while benefiting from the group’s buying power.
To rein in insurance costs, some states are trying to address the upstream causes of nuclear verdicts. Florida and Georgia, for example, have tightened rules on attorney fees, damages and bad-faith claims, leading to lower insurance costs, according to AHLA.
But most states haven’t taken significant action, creating an opportunity for hotels to advocate for policy changes that could impact their bottom line.
“Hoteliers can work with public officials to create a more balanced litigation climate and drive down the cost of social inflation,” Shah said.
