Why Many Carriers Are Pulling Out of Restaurant and Hospitality Risks
Across the country, the insurance landscape for restaurants and hospitality operations is changing rapidly. For many years, restaurant owners were able to rely on Business Owner Policies (BOPs) to conveniently bundle property, liability, and loss of income coverage into a single policy.
Today, that is no longer the case.
The BOP Exit: What Is Happening
Many carriers that previously welcomed restaurant and tavern business are now either declining new submissions or refusing to renew existing accounts. This is occurring most often with establishments that have the following characteristics:
Liquor sales that represent more than forty percent of total revenue
Live entertainment, including DJs or bands
Late operating hours, especially those closing after midnight
Dance floors, doormen, or security personnel
These operational factors increase exposure to liquor liability and assault and battery claims, which are difficult for carriers to underwrite profitably. As both the frequency and severity of claims have increased—often linked to intoxication incidents, altercations, or slip and fall accidents—many standard markets are choosing to exit the class entirely rather than raise premiums even further.
Why It Is Happening
Claims Inflation: The cost of repairs, settlements, and medical expenses has increased dramatically. Claims that once totaled ten thousand dollars now frequently exceed twenty-five thousand dollars.
Reinsurance Pressure: Global reinsurance markets have reduced their capacity for hospitality risks and raised their pricing, forcing primary carriers to tighten guidelines and limit new business.
Liquor Liability Trends: Social inflation and large jury verdicts have caused liquor-related claims to rise across nearly every state.
Operational Risk: Establishments that serve alcohol, host live entertainment, and remain open late into the night face statistically higher risks of loss.
Who Is Still in the Market
Specialty carriers and program administrators that focus exclusively on hospitality have begun filling the gap. However, these markets often have stricter underwriting requirements and higher minimum premiums. They typically request detailed information such as:
Complete loss runs
Security protocols including camera systems, bouncer training, and ID verification procedures
Signed house rules and employee handbooks
Entertainment calendars or event descriptions
The positive aspect of these specialized programs is that they often understand hospitality risks more thoroughly and can offer competitive coverage options when approached with the right preparation.
What Owners Can Do Now
If your restaurant, bar, or nightclub is facing a non-renewal or a significant rate increase, there are several steps you can take:
Gather your loss runs and begin marketing your account at least sixty days prior to renewal.
Work with an insurance professional who specializes in hospitality rather than a generalist agent.
Highlight your risk management controls, including staff training, security procedures, and operational improvements.
Consider purchasing a separate liquor liability policy if your property carrier excludes that coverage.
The Bottom Line
The restaurant and nightlife insurance marketplace is becoming more segmented. Business Owner Policies are no longer accommodating venues with substantial liquor sales or entertainment exposure. However, with the right approach and a broker who understands the industry, viable coverage options still exist.
At KEL Insurance Services, our focus is on hospitality. We partner with carriers that specialize in restaurants, bars, and nightlife operations rather than treating them as a small part of their overall book of business. Whether you operate a neighborhood restaurant with weekend entertainment or a late-night bar with live music, we can help you navigate this changing market and maintain the protection your business deserves.