Hotel & Clubs Liability Insurance

Hotel & Clubs Liability Insurance

The liability risks for Hotels and Clubs continue to increase despite the Civil Liability Acts that have sought to restore the balance between personal responsibility of an individual and the duty of care owed by the premises.

Whether the premises are safe to move around in with adequate lighting, to continuing to serve a clearly intoxicated patron, to the safety concerns with over-crowding or even food poisoning from meals or snacks sold. The risks require specialist attention from an experienced Broker and a conscientious Insured.

Despite this, many Hotels and Clubs fail to take out appropriate Insurance exposing their business and other shareholders to considerable potential losses and even bankruptcy. If run such a business, you must have Public and Products Liability or a specialist liability package specifically designed for Hotels and Clubs.

The following are examples of litigation that has occurred involving a Hotel. These examples illustrate why every Hotel needs a Combined General & Products Liability Insurance policy.

Please Note:These claims examples are intended to illustrate broadly some of the kinds of exposures Hotels can face. Refer to the policy wordings for the complete terms and conditions.


The claimant was drinking at a Hotel with some friends. Also on the premises was another individual that was playing a flute quite loudly. For reasons unknown the claimant took exception to the flautist’s work and a confrontation ensued.

Both parties were ejected from the Hotel by security. The security was undertaken by contract guards who were not employed by the Hotel.

An altercation occurred just outside the Hotel in which the flautist assaulted the claimant and broke his jaw in a number of places.

The matter was not litigated but the claimant did instruct solicitors. It was alleged that the Hotel did not provide a safe environment for the claimant and failed to provide adequate security for patrons at the Hotel.

By the time the claimant notified the Hotel of his claim the security firm could not be located, leaving the Hotel as the only potential source of recovery.

The claimant sustained serious facial injuries resulting in a significant degree of pain and suffering and time off work. They also produced compelling psychiatric evidence depicting post traumatic stress disorder and anxiety and avoidance behaviour.

The Hotel has a duty to ensure that the premises are as safe as reasonable care can make them. Assessment of what that duty entails will often make reference to the type of premises and the type of person that might be on the premises. This might also include contemplation of various stages of inebriation of patrons given the service of alcohol.

One matter which would commonly be examined is the role of the security staff, however in the circumstances above, the security contractor could not be identified, this left the Hotel as the only “pocket” for the claimant.

The above matter was resolved prior to proceedings being issued to mitigate costs. A modest settlement sum was paid on a commercial basis, inclusive of the claimant’s legal costs.


The deceased attended and was drinking on the licensed premises. He suffered fatal injures as a result of a road accident when he came off his motorcycle when riding home after drinking at the Hotel. His blood alcohol reading was several times in excess of the legal limit.

At some point in the evening a rumour had circulated that there was a police breathalyser or speed camera near the deceased’s home. He handed over his keys to the licensee on the basis that the bike would be kept at the hotel and his wife would pick him up and he would return the next day to collect it.

Due to his level of intoxication he was refused further service at which point he demanded his keys back. He swore at the Licensee and refused to provide his wife’s telephone number.

The deceased’s wife sued and the CTP insurer sued the Licensee alleging that the Proprietor and Licensee owed the deceased a duty of care and that they were in breach of their duties of care to him.

The claim was essentially that the hotel Licensee was under a duty to protect the claimant from the effects of the alcohol he voluntarily consumed, there was “a duty to take reasonable care selected prospectively by the deceased and the Licensee as the means by which the deceased’s interests in not facing the risks of driving the motorcycle while intoxicated could be protected” and should have refused to return the keys to the bike.

The plaintiff failed to establish existence of that duty of care and the case against the Hotel failed.

The liability of Licensee for injury or damage arising from the consequences of serving alcohol had been previously considered by the High Court in the matter of Cole v South Tweed Heads Rugby League Football Club (“Cole”) and the judgment in this matter confirmed the position adopted previously by the High Court in Cole. Even in light of the decision which favours the Hotel Licensee in this case, there are considerable legal costs and risks of this kind, even if a claim is without merit.

Whilst costs are not confirmed, this matter was the subject of the primary hearing and appeals to the Tasmanian Court of Appeal and the High Court. Costs claimed in such circumstances could possibly be as much as $250,000.