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Hospitality Insurance Market Overview: Key Trends & Regional Insights

03.5.25

5.03.25

03.5.25

Featured Solutions: Hospitality

Key Takeaways:

The U.S. Hospitality Insurance market remains hard, with Liquor Liability coverage tightening across most states.
Social media marketing can significantly impact a business’s insurability.
Liquor sales exceeding 50% of revenue make coverage harder to obtain, reinforcing the need for diversified income streams.
Liquor Liability insurance is not a one-size-fits-all policy and must be customized to each business’s unique circumstances, considering local regulations, pricing, and risk exposure to ensure adequate protection.
Brokers should proactively review applications and advise clients on risk management strategies to improve insurability.

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Hospitality Insurance continues to face a hard market. Securing Liquor Liability coverage is particularly challenging in some states due to factors such as litigation, nuclear verdicts, and dram shop laws, which impose severe penalties on establishments serving minors or visibly intoxicated patrons. Many insurance carriers have moved away from offering standard $1M/$2M liability limits, leading to a need for layered policies. Additionally, coverage for Assault & Battery (A&B) is increasingly being excluded or heavily restricted.

Due to regional differences in regulations, pricing, and risk exposure, businesses need to tailor their coverage to their specific circumstances. Whether your clients are operating a bar in a major city or hosting events in a rural town, it is crucial to understand the local Liquor Liability framework to ensure that your clients remain protected.

Regional Updates

Hardening Market: States like Missouri, with strict dram shop laws, face some of the most challenging Liquor Liability placements. In contrast, states without dram shop laws, such as Kansas, Nebraska, and South Dakota, generally find it easier to secure these placements.

Liquor Liability Restrictions Expand: Liquor Liability insurance is becoming increasingly difficult to obtain. Insurance carriers are raising minimum premiums, reducing coverage, lowering limits, or even exiting the liquor exposure class altogether. As the cost of Liquor Liability coverage continues to rise, many businesses have been forced to close their doors or make significant changes to their operations.

In the Northeast, each state has different dram laws, which adds to the complexity of keeping up with market fluctuations. For instance, businesses in Vermont that serve alcohol may find it challenging to secure coverage. Historically, Liquor Liability policies covered A&B; however, many carriers now often sub-limit or exclude A&B coverage.

Persistent Coverage Hurdles: South Carolina continues to be one of the most challenging states in which to obtain Liquor Liability coverage. Florida continues to experience increased Liquor Liability rates, with limited market availability. Underwriting scrutiny remains high, particularly for establishments with high liquor sales ratios.

Tightening Liquor Liability Market: Arizona’s dram shop laws make risk placement extremely difficult, while Nevada, which lacks such laws, has more carrier options.

Liquor Liability insurance in Texas has become increasingly difficult to obtain, and current trends indicate this situation is unlikely to improve soon. Insurance carriers for Liquor Liability have had to tighten their guidelines, offer lower coverage limits, and, in some instances, withdraw from the state in response to the significant losses they are experiencing in the region.

Louisiana’s dram shop laws generally favor businesses over third-party victims, meaning restaurants, bars, and alcohol vendors are typically not held liable for injuries or damages caused by an intoxicated person. However, exceptions exist, such as when a business serves alcohol to a minor (under 21 years of age). Many markets have pulled out of writing monoline Liquor Liability coverage in Louisiana since there is not a lot of premiums involved, and one unusual loss or alleged loss could create a large amount of legal defense expense.

Emerging Trends

Social media – whether Facebook, Instagram, TikTok or another platform, a business’ online presence is playing a growing role in Liquor Liability underwriting. Bars and restaurants that actively promote drink specials, late-night events, or high-risk activities may face higher premiums and fewer coverage options. Underwriters routinely assess an establishment’s social media and websites to ensure that their public promotions align with their insurance applications, as discrepancies could jeopardize coverage.

Lower limits – many policyholders are opting for lower Liability limits to manage rising premiums. While this choice can help control costs, it may leave bars, restaurants, and other hospitality venues financially vulnerable to large claims and out-of-pocket expenses.

A&B coverage – although it increases premiums, A&B coverage is an essential layer of protection for both Liquor and General Liability policies, especially in nightlife-centric markets.

Rotational themed events – venues are increasingly aiming to provide unique, immersive experiences for their customers. However, promoting an “unforgettable night” can lead to higher liability risks.

To-go liquor sales – the ability to purchase alcoholic drinks and take them outside the establishment can create issues related to public intoxication and drunk driving.

Mobile bars, including pedal bars and cocktail trucks – present coverage difficulties due to their lack of fixed locations.

THC-infused drinks – Liquor and General Liability insurance policies typically do not cover the sale of any cannabis beverage. If a client is interested in adding these types of offerings, it is vital to meet with a Cannabis insurance expert, as markets are limited for this class of business.

Extended happy hours, late-night specials, and high liquor-to-food ratios – contribute to higher risks and underwriting scrutiny.

Hibachi-style restaurants and tableside cooking venues – face heightened General Liability concerns, particularly regarding fire hazards and slip-and-fall claims.

BYOB (Bring Your Own Bottle) – allows patrons to bring their own beer, wine, or liquor to a restaurant. This may involve paying a corkage fee to the establishment. While this practice can attract more customers, it may also result in underreported alcohol revenue and increased liability for the restaurant.

Recreational entertainment – such as axe throwing, virtual reality arcades, and golf simulators, combine alcohol with physical activities, resulting in a higher risk of injury and greater exposure to liability.

Tips for Brokers and Agents

Regardless of location, here are some tips that can make brokers and agents more successful in attracting new Hospitality businesses and keeping existing clients.

Check state and local regulations. Liquor laws vary by state and municipality, affecting licensing requirements, liability exposures, and insurance needs. Encourage clients to consult their state’s alcohol regulatory agency to ensure compliance.
Pre-underwrite applications. Identify high-risk factors—such as drink specials, late hours, and a large percentage of college clientele—before submitting applications to insurance carriers. Help clients assess if the risks justify the potentially higher insurance costs. Update applications and loss runs with current data.
Audit social media. Ensure your client’s social media posts align with their business plan and insurance coverage. Advise them to delete any content that may raise concerns. Highlighting food offerings while downplaying alcohol promotions can help secure and maintain coverage.
Establish and regularly review risk management policies. This may include conducting regular social media audits and implementing measures to prevent intoxicated customers from driving, such as promoting ride-sharing services or encouraging the use of designated drivers. Additionally, consider reviewing business hours and menu options to enhance underwriting prospects.
Meet with clients on-site. Conduct venue tours to assess potential liability risks and discuss risk control strategies. For example, encourage clients to expand food sales to reduce the liquor-to-food revenue ratio, which may improve their attractiveness to insurance carriers.
Manage client expectations. Understand that a client’s needs and beliefs may not align with current market conditions. Ask about their business model so you can effectively advocate for their coverage needs.
Emphasize operator experience. While newer ventures can be more challenging to insure, establishing that a seasoned hospitality business owner has a good track record with few claims can make a client more appealing to insurance carriers.
Partner with an experienced E&S wholesaler. Navigating the hard Hospitality Insurance market requires specialized expertise. Work with an E&S wholesaler familiar with local liquor laws to secure tailored coverage and navigate complex regulations. They can provide access to various markets, structure comprehensive insurance solutions, and offer risk management strategies for difficult placements.

Even in a tight market, opportunities in the Hospitality sector are abundant. You can uncover new business prospects through networking, positioning yourself as a subject matter expert, and staying current through continuing education.

For challenging placements, Burns & Wilcox is here to help—leveraging deep market expertise and strong carrier relationships to find solutions across North America.

Contributors: Doug Legters, Regional Vice President, Northeast, Burns & Wilcox, New York, NY; Aaron Pfister, Associate Managing Director, Underwriter, Commercial Insurance, Burns & Wilcox, Scottsdale, AZ; Mandi Bitterlin, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Kansas City, KS

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.