Hotel Liability- When is a hotel liable for damage to or loss of guest property? A comprehensive overview

Hotel Liability: When is a Hotel Liable for Guest Property?

Your much-anticipated vacation was ruined. Personal belongings vanished from your hotel room. Perhaps they even disappeared from the in-room safe.

Seeking Compensation: Navigating Hotel Refusal

The hotel refuses to review security footage for theft investigation. Instead, they offer minimal compensation, not real financial amends.

Before Legal Action: Understanding Your Rights

Before suing, grasp legal responsibility. What if booking terms exempt the hotel from liability? When can you claim compensation? How do you get it? This article has answers.

Personal Belongings Lost at a Hotel: What Does the Law Stipulate?

The relevant legislation is the Custodian Law of 1967. Section 12 of this law establishes that hotels and guesthouses are responsible for safeguarding belongings on their premises as “paid custodians.”

This responsibility applies to guests staying at the hotel (as opposed to temporary visitors, such as day spa guests).

When is a Hotel Exempt from Liability for Damage or Loss?

1. For high-value items – the guest did not declare them and did not comply with a request to deposit them (e.g., in the hotel safe);
2. The guest did not notify of the loss/damage within a reasonable time after discovering it or when they should have discovered it;
3. The damage or loss was due to unforeseen circumstances that the hotel could not have foreseen or prevented.

The third condition is most significant. Section 12(d) of the Custodian Law explicitly states that if such notification was not given, the hotel is exempt from liability.

Booking Terms or Reception Signage States: “The Hotel is Exempt from Liability for Any Damage or Loss.”

Booking forms or signage on hotel premises constitute a standard-form contract. According to Section 4 of the Standard Contracts Law, this is a “coercive clause.” This is because it unreasonably exempts the supplier (hotel) from liability imposed by law (Custodian Law).

Standard Contracts: Void Clauses Explained

Section 5 of the Standard Contracts Law voids coercive clauses. This means hotels cannot use them as a defense.

Liability Limitations: When They Are Valid

Important Note: The situation changes if booking forms or signs state liability limits. These limits must align with the Custodian Law. In such cases, it’s not a coercive clause. It’s a term reflecting and emphasizing existing law. This term wouldn’t be void in a bilateral agreement. That’s where parties explicitly agree to hotel non-liability, though this is rare.

Does the Law Apply Only to Hotels?

The Custodian Law applies to all guesthouses, including pensions, provided the guest stayed there (not just visited). Therefore, even if you stayed at a guesthouse that is not a hotel, the liability issues discussed apply.

Is There a Difference Between “Regular” and “Valuable” Items?

The law and case law distinguish between regular property (used by the guest regularly) and valuable property. For example, there is a difference between a simple shirt, sunglasses, a mobile phone, etc., and valuable property such as a diamond necklace or a large sum of cash.

By law, hotel liability only arises if the guest informed the hotel (before or immediately upon arrival) that they possessed valuable property and, at the hotel’s request, deposited it for safekeeping. Safekeeping could also involve storage in a safe, according to hotel instructions.

The Hotel Refuses to Accept Liability. What to Do?

If the hotel is legally liable but refuses to accept responsibility, you can send a letter of intent before initiating legal proceedings. This can save resources (especially time and money) and clarify the hotel’s position.

If the hotel maintains an incorrect stance, you can file a small claims lawsuit against the hotel. In a small claims lawsuit, you can claim compensation for the value of the items, compensation for non-pecuniary damage (such as emotional distress), and any financial expenses related to the damage/loss.

How to File a Small Claims Lawsuit Against a Hotel?

Small Claims Court: Limits and Benefits

As of January 2024, small claims are capped at NIS 38,900. This amount updates yearly. Sometimes, damages exceed this limit.

Why Choose Small Claims?

If the difference is small, many prefer small claims. Standard civil cases cost more and take longer. For example, standard fees are 2.5%, while small claims are up to 1%. Standard cases can take years. Small claims average six months. Also, small claims avoid lawyer fees. Both parties proceed without legal representation, saving money.

Dino’s system allows you to prepare a small claims lawsuit online in an average of 14 minutes, from any device.