Legal Audit of Public Liability Insurance in the Hospitality Sector

Contractual Alignment, Risk Allocation and Strategic Compliance for Modern Hotel Groups

Civil liability as a core pillar of legal risk management in hospitality

In the contemporary hospitality industry, particularly in luxury resorts, mixed-use tourism developments, and international hotel management structures, civil liability exposure is multidimensional and constantly evolving.

It no longer concerns only traditional guest injury or property damage claims. Today, liability may arise from:

• hotel management and franchise agreements

• tour operator and OTA contracts

• wellness, medical tourism and high-risk leisure activities

• food & beverage operations

• employment and contractor relationships

• data protection and cyber incidents

• ESG and duty-of-care obligations

In this environment, the legal audit of public liability insurance is not a technical insurance review. It is a strategic legal exercise in corporate risk governance.

The regulatory and contractual framework

A proper legal review of liability insurance for hotel groups operates within a complex legal matrix:

National law

• Civil Code (tort liability, contractual liability, vicarious liability)

• Insurance Contract Law

• Consumer protection framework

• Employment law

European Union law

• Package Travel Directive and connected travel services

• GDPR and civil liability for data breaches

• Product and service liability regimes

International contractual practice

• Hotel Management Agreements (HMAs)

• Franchise and branding agreements

• Operator standards

• Lender insurance requirements

• ESG and corporate governance frameworks

Critical legal issues in the audit of liability insurance

A high-level legal audit focuses not only on policy limits but on the interaction between insurance coverage and contractual risk allocation.

3.1. Contractual insurance misalignment

In hotel groups it is very common to identify:

• contractual indemnities exceeding policy coverage

• liability caps in commercial agreements that are not mirrored in insurance

• waiver of subrogation clauses not accepted by insurers

• additional insured obligations not properly structured

This creates uninsured exposure with direct impact on the group’s balance sheet.

3.2. Insured structure and group exposure

Key questions include:

• Are all group entities covered?

• Are hotel operators and management companies included?

• Are SPVs and asset-holding entities protected?

• Is cross-liability coverage in place?

• Are contractors and service providers properly addressed?

3.3. Limits of liability and aggregation risk

For luxury and high-capacity resorts, traditional limits often:

• do not reflect the real litigation environment

• fail in mass-claim scenarios

• do not account for reputational and consequential loss exposure

3.4. Sector-specific exclusions

Particular attention is required for exclusions related to:

• swimming pools and wellness facilities

• F&B operations

• events and conferences

• marine and sports activities

• environmental incidents

• cyber risks

Liability insurance as an ESG and governance tool

For modern hospitality groups, insurance adequacy is not merely a legal safeguard.
It is:

• a corporate governance indicator

• a financing prerequisite

• an ESG risk management metric

• a brand protection mechanism

Investors, operators, and lenders increasingly assess insurance structures as part of due diligence.

Our legal methodology

Presso lo Studio Legale Tsamichas, the audit of public liability insurance is conducted through a structured, multi-layered legal approach:

Phase 1:  Liability exposure mapping

• corporate structure analysis

• operational risk identification

• activity-based liability assessment

Phase 2: Contractual review

• hotel management agreements

• tour operator contracts

• supplier and service agreements

• employment framework

Phase 3:  Insurance policy analysis

• scope of cover

• insured parties

• exclusions

• limits and sub-limits

• claims-made vs occurrence triggers

Phase 4: Gap analysis

Identification of:

• uninsured risks

• contractual inconsistencies

• underinsurance

Phase 5: Strategic recommendations

• restructuring of insurance architecture

• contractual reallocation of risk

• alignment with international operator standards

• enhancement of insurability profile

Financial and transactional importance

A properly structured liability insurance program:

• protects EBITDA and asset value

• is essential for project financing and refinancing

• strengthens the group’s position in M&A transactions

• reduces litigation volatility

• enhances investor confidence

The role of the specialised legal advisor

In complex hospitality structures, legal counsel acts not merely as a reviewer of policies but as:

• risk architect

• compliance strategist

• transaction enabler

Integrating: legal exposure – insurance coverage – business strategy.

Conclusione

In an industry where guest safety, brand reputation and international contractual obligations converge, the legal audit of public liability insurance is a fundamental component of sustainable growth.

For hotel groups operating in a globalised and highly regulated environment, the transition from:

standard insurance placement to strategic legal risk structuring is not optional, it is a prerequisite for resilience, investment readiness and long-term value creation.

Hospitality • Insurance • Corporate Risk • Complex Commercial Contracts

We advise hotel owners, operators and hospitality groups on:

• legal audit and restructuring of insurance programs

• contractual risk alignment

• cross-border commercial frameworks

• corporate risk governance

delivering integrated legal solutions tailored to the operational reality of the modern hospitality industry.