Stephen McCord
Executive Vice President, Business Insurance, Real Estate & Hospitality
Hotels have long faced operational risks—from slip-and-fall incidents to property crime—and assault and battery (A&B) and sexual abuse and molestation (SAM) exposures have become a growing liability concern for the hospitality sector. Incidents that once had mainly reputational consequences are now more frequently leading to litigation and financial losses.
One factor is changes in the legal landscape around human trafficking. Amendments to the Trafficking Victims Protection Reauthorization Act (TVPRA) have, in some cases, expanded civil liability by allowing victims to sue not only perpetrators but also entities that allegedly “benefited” from trafficking activity or where trafficking occurred—including hotels. Plaintiffs’ attorneys have used this framework, in some cases, to argue that properties failed to prevent or detect trafficking activity on-site.
Consequently, hospitality operators may face greater scrutiny over what they knew or reasonably should have known about activity at their properties.
At the same time, A&B claims more broadly appear to be increasing rising across hospitality settings. Guest-on-guest violence, unauthorized room access, parking lot assaults, and bar altercations have, in some cases, been brought under operational negligence theories, with plaintiffs alleging these events could have been prevented by stronger access control, supervision, or improved staff training.
Insurance implications for hotel owners and operators
The commercial insurance market has generally tightened coverage for A&B and SAM exposures. In some cases, carriers that previously included those coverages within standard general liability policies have limited or removed them.
Many hospitality operators are encountering structural changes in the casualty market, including:
- A&B and SAM exposures may be shifting, in some cases, from standard liability coverage to sublimits or exclusions.
- Some umbrella carriers are declining to provide coverage above A&B sublimits.
- Reduced insurer capacity, with some carriers reducing available limits from $10M to $5M.
- In some markets, placing the first $10M in excess coverage has become more difficult.
Insurers are increasingly emphasizing location-level crime data, operational controls, and documented safety practices when determining limits. Properties with higher risk profiles may face limited or restricted A&B coverage—or none at all.
These market changes can create potential financial exposure for hotel owners and operators. Coverage gaps from exclusions or sublimits may leave properties responsible for seven-figure claims. In addition, lenders and government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac, have set requirements that may limit financing availability unless liability policies meet certain standards, which can increase pressure on operators to secure appropriate coverage.
