Hotel owners face higher casualty premiums and narrower coverage at renewal. Brokers and trade groups point to rate increases, a shrinking field of carriers and jury awards that now reach eight figures.
Forty-three percent of hotel owners named insurance premiums among their greatest financial pressures in a March survey by the American Hotel & Lodging Association.
The rate data backs the survey. IMA Financial Group’s Q1 2026 hospitality market report puts general liability increases at 5% to 15% for operators with favorable loss histories. Operators without that record face 15% to 30%. Umbrella and excess liability rates rose 10% to 20%.
The carrier pool thins
Paul DiBenedetto, franchise practice leader at broker Hub International, counts about 10 carriers writing hotel casualty in 2026. Five years ago the pool held roughly 25. Three of the 10 are real options for a hotel owner, he said.
The carriers that remain cut coverages to stay in the market. Policies now exclude human trafficking, sexual abuse and molestation, and assault and battery, according to DiBenedetto. Those exclusions leave hotels exposed to the risks behind the claims.
DiBenedetto called the casualty market “probably the toughest it’s ever been.”
Nuclear verdicts set the price
A nuclear verdict is a jury award above $10 million. AHLA reports that nuclear verdicts doubled nationally from 2023 to 2024. Total awards rose from $14.5 billion to more than $31 billion over the same period, according to the association.
Those awards set the reserve behind every renewal, and hotels carry exposure as public-facing businesses. DiBenedetto said the same arithmetic now covers routine incidents. “Even things that were routine — a slip-and-fall, a trip-and-fall — are now six- and seven-figure settlements,” he said. “Hotels are seeing $5 million, $10 million claims on things that, historically, were $100,000 claims.”
The National Association of Insurance Commissioners ties the trend to social inflation: liability claim costs that rise faster than general inflation. Third-party litigation finance adds pressure, with outside investors funding suits for a share of the settlement or verdict, according to NAIC. The Insurance Information Institute adds negative public sentiment toward corporations and desensitization to large awards.
“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, AHLA general counsel and executive vice president of policy, regulatory and legal affairs, said in an email.
Training moves the premium
DiBenedetto puts staff training first among the levers a hotel controls. “Training, training and more training,” he said.
Carriers now ask for annual documented training on human trafficking, sexual abuse and slip-and-fall prevention. The requirement covers every employee, managers included, he said. Hotels that keep the records renew at better terms. Hotels that leave risk management loose draw the most claims and the largest increases.
Underwriters also read public reviews. DiBenedetto said some carriers will not quote a property rated below 3.5 on Tripadvisor. He advised brands to make sure operators watch those scores and keep posted comments genuine.
“No one can sell the hotel company to the underwriter better than the hotel company can,” said Jackie Collins, executive director and senior area vice president for the real estate and hospitality practice at Arthur J. Gallagher & Co.
Total cost of risk
Collins asks hotels to build their own submission: complete loss information, a written account of the risks and a direct meeting with the underwriter. DiBenedetto advises a broker who specializes in hospitality. A generalist can sell a policy whose exclusions surface at claim time.
A lower premium can hide a gap. Hoteliers who trim property values or business interruption limits to hold the premium down can find a claim exceeds the limit. DiBenedetto said the measure that matters is total cost of risk, uninsured losses included. “When one of these nuclear claims hits, it will put you out of business,” he said.
Franchisors enforce, states legislate
Franchisors now police coverage. Where a franchisee skips a required policy, the franchisor can buy it and bill the franchisee, DiBenedetto said. One franchisor threatened to cut a franchisee off from its reservation system.
Hub uses the buying power of large franchise systems to negotiate rates and terms. DiBenedetto cited Wyndham Hotels & Resorts and its roughly 9,000 hotels as the kind of system that gives an individual owner leverage. Each franchisee still renews as its own account.
Two states have changed the rules that feed the awards. Florida and Georgia tightened limits on attorney fees, damages and bad-faith claims, and AHLA credits those changes with lower insurance costs. Most states have taken no significant action.
“Hoteliers can work with public officials to create a more balanced litigation climate and drive down the cost of social inflation,” Shah said.