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Overview of the current situation
Public reporting indicates that active and rapidly evolving military actions are now underway with Iran. Reporting further indicates that the impact and defensive responses from Iran are affecting Israel, the United Arab Emirates (including Dubai), Saudi Arabia, Qatar, Iraq, Jordan, Kuwait, Lebanon, Oman, Syria, Yemen, and Bahrain – all of which are common destinations or transit hubs for international hospitality operations.
The Middle East conflict has reportedly impacted hotels and resorts, event venues, tourist attractions, airports, and other targets. Civil and local authorities have announced emergency measures, including travel advisories and restrictions, foreign airspace closures, maritime advisories, and heightened security protocols. These developments carry material implications for the hospitality industry, including hotels, resorts, and related tourism businesses, both within the region and across interconnected global travel markets.
Why the hospitality industry is uniquely exposed
Hotels and other hospitality businesses face distinct vulnerabilities during a geopolitical crises of this nature, particularly those with significant property investments in or near affected regions. The current conflict creates multiple potential loss scenarios, including:
- Physical property damage from military strikes or collateral damage
- Business interruption due to travel restrictions, airspace closures, decreased or eliminated hotel or venue access, or reduced tourism
- Contingent business interruption due to damage to customers’ or suppliers’ business locations that causes financial losses to your business operations, such as damage to airports or transportation centers
- Event cancellations affecting conferences, sporting events, concerts, and group bookings
- Supply chain disruptions affecting food, beverage, and operational supplies
- Guest safety and liability concerns arising from the unstable environment
Immediate steps for hospitality industry policyholders
With high-severity geopolitical events, coverage preservation depends on both process and policy language. Hospitality businesses with operations, assets, or significant revenue exposure tied to guest travel or events from or through the affected regions should take prompt action to protect their coverage rights.
Gather and map all potentially responsive policies. Assemble complete copies of all first-party policies that may be implicated by the ongoing conflict, including all endorsements, manuscript forms, and declaration pages. Potentially responsive policy lines for hospitality businesses include commercial property and business interruption, contingent business interruption, cargo and other marine insurance products, event cancellation and contingency insurance, political risk and political violence coverage, cyber insurance, and general liability. Because some commercial property policies may contain war or hostilities exclusions, policyholders should review all of their policies closely to determine the scope of coverage, including exclusions, endorsements, and write-backs. If a war or hostilities exclusion applies without a write-back or alternative coverage, policyholders should contact coverage counsel to determine the best avenues for coverage.
Provide prompt notice to insurers. In the wake of complex geopolitical issues, insurers often assert notice defenses, making timely action essential. Hospitality businesses should provide prompt written notice to all potentially responsive insurers, even where loss amounts have not yet been quantified, coverage is uncertain, or losses remain contingent or developing. Review and follow notice provisions precisely, identifying the required method, timing, and recipient for each notice. Where facts are still developing, notices should be expressly framed as being subject to supplementation. Adhering to a policy’s notice provisions preserves optionality and mitigates the risk of any later notice-based coverage defense.
Anticipate and review carrier notices. Insurers and reinsurers may begin issuing immediate notices of cancellation or modification of coverage for the affected territories with short windows of effect. Clients should continuously monitor incoming insurer correspondence closely and review any such notices promptly upon receipt. These notices often impose strict deadlines for action, and failure to respond appropriately may result in a lapse of critical coverage.
Review and comply with policy conditions. Many policies impose duties beyond notice. For example, policies frequently require policyholders to take reasonable steps to prevent or minimize loss. Hospitality businesses should thoroughly document all mitigation efforts, including guest safety measures, evacuation decisions, staff relocations, and temporary suspension of operations. Certain policies may require insurer consent for major expenditures. Failure to comply with these requirements can independently jeopardize recovery, regardless of the merits of the claim.
Carefully document all business interruption losses. Business interruption coverage can protect hotels and other hospitality businesses when they are not able to conduct regular business due to a covered loss. Policyholders should also carefully document all cancellations, business trends, and other financial data to ensure that losses are accurately tracked for business interruption claims. Many businesses designate a person(s) and a dedicated cost center to track and capture all potential loss amounts as they develop, rather than having to track backward at a later date.
Special considerations for commercial property policies
Early assessment of policy requirements, coverage grants, and exclusions is critical to effective risk management and recovery.
Physical loss or damage requirement. Most business interruption policies require “physical loss of or damage to” the insured premises caused by a covered peril, such as a fire. Hospitality businesses experiencing revenue losses solely due to reduced travel demand – without physical loss of or damage to their properties – may face coverage challenges unless the business can identify physical loss or damage to a customer’s or supplier’s property that causes the loss of revenue.
Waiting periods. Business interruption coverage often begins only after a 24- to 72-hour waiting period. Hospitality businesses should review these provisions closely to understand how these waiting periods may apply to their specific loss scenarios.
Contingent business interruption. Contingent business interruption coverage can cover losses if a key supplier or customer is forced to close because of the unrest. Hospitality businesses dependent on regional suppliers for food, beverages, or operational supplies should assess whether this coverage is in place.
Civil authority and ingress/egress coverage. Most business interruption policies also provide coverage for loss and extra expenses incurred by way of an order of civil or military authority that limits, restricts, or prohibits partial or total access to an insured location as a result of insured physical damage in the surrounding area. Separately, there may also be coverage for loss incurred by way of a partial or total prevention of ingress to or egress from an insured location, regardless of whether the insured property has been damaged.
Extra expense coverage. This coverage addresses costs incurred to minimize a shutdown, such as renting temporary space or making expedited repairs. Hotels may incur significant extra expenses to relocate guests, secure alternative supply chains, or maintain operations during the conflict.
Special considerations for event cancellations
Event cancellations and postponements may contribute to business interruption losses for hospitality operators, including reduced occupancy and diminished revenue tied to scheduled events. These same conditions also present exposure under event cancellation and contingency insurance, including for scheduled sporting, entertainment, and corporate events both within and outside the region – subject to each policy’s specific terms and conditions. Given the uncertainty as to the duration and the extent of hostilities in the region, policyholders are advised to review existing coverage and provide notice for potential event cancellations as early as possible.
Coverage lines implicated. Policyholders should evaluate seeking coverage under event or contingency insurance for lost revenue or profit and mitigation costs incurred in light of events that are cancelled, postponed, abandoned, or interrupted by the ongoing hostilities. These policies are intended to protect any party with a financial interest or intent in an event (e.g., sponsors, venue owners, and promoters). Event cancellation and contingency insurance can apply across a broad range of event types and scales, including major sporting events, conferences, orchestral performances, exhibitions, and other cultural or commercial events. Public reporting indicates that postponement, relocation, and monitoring of scheduled events (such as F1 and soccer events) has already occurred in Qatar, Bahrain, and the United Arab Emirates. These policies may also include war and hostilities exclusions and thus should be evaluated holistically, considering all exclusions and endorsements.
Potential insurance triggers. In the current Middle East environment, subject to a specific policy’s terms and conditions, coverage may arise from: (i) the inability of participants, teams, performers, or production personnel to travel due to airspace shutdowns and airport closures; (ii) government advisories, security directives, or restrictions on safe staging of events; and/or (iii) cancellation or relocation of preparatory activities, qualifying events, or supporting competitions. Even where events are scheduled outside the conflict zone, reliance on Middle East transit hubs (e.g., Dubai or Doha) or on regional participants may trigger cancellation, postponement, or non-appearance exposures under event contingency placements.
Special considerations for travel insurance
Public reporting indicates that travel insurers are invoking war and hostilities exclusions in connection with the current Middle East conflict, with insurers asserting that losses arising from military action, missile strikes, drone activity, and related government responses fall outside the scope of standard travel insurance coverage. As a result, travelers may find that trip cancellation, interruption, or delay claims tied to the conflict are denied based on broadly worded war exclusions.
Definitions and specific wording of coverage grants and exclusions tend to vary from one insurer to another. Policyholders should review the definitions of specific terms like “war,” “terrorism,” “hostilities,” and “political unrest” to determine if trip cancellations or safe-return costs are covered by their travel policies.
Conclusion
The developing Middle East conflict presents material and immediate risks for global policyholders. Coverage outcomes will depend heavily on strategic claim-handling in the earliest stages. We strongly encourage all affected clients to act swiftly to assess their exposure, engage with their insurers and brokers, and take all reasonable steps – including thorough documentation – to mitigate potential losses.
The Reed Smith Insurance Recovery Group is available to lend policyholders our know-how and experience in policy review, notice preparation, and strategic guidance as this situation continues to unfold. Please do not hesitate to contact us if you have questions or require assistance.
This alert is based in part on publicly available information as of March 4, 2026, and conditions may change rapidly.
Client Alert 2026-049