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

Your long-awaited vacation was ruined by the disappearance of personal belongings from your hotel room, perhaps even from the in-room safe.

The hotel refuses to review security footage to investigate the theft and offers only minimal compensation instead of real financial amends.

Before pursuing legal action, it’s crucial to understand: Who is legally responsible? What happens if the booking terms state the hotel is exempt from liability for “damage or loss”? When can you claim compensation from the hotel? And how do you receive it? This article provides 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 to the hotel owner and did not comply with a request to deposit them (e.g., in the hotel safe);
2. The guest did not notify the hotel 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).

According to Section 5 of the Standard Contracts Law, a coercive clause in a standard-form contract is void (meaning the hotel cannot use it as a defense).

Important Note: The situation differs if booking forms or signage specify limitations of liability consistent with the Custodian Law.

In such a case, it’s not a coercive clause but a term that reflects the law and emphasizes it. Furthermore, such a term would not be void in the case of a bilateral (not standard-form) agreement where the parties explicitly agreed that the hotel is not liable (a rare situation almost never seen).

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?

As of January 2024, the maximum amount that can be claimed in small claims court is NIS 38,900, and this is updated annually. Sometimes, the damage exceeds the small claims court limit.

However, if the difference between the damage and the limit is small, many plaintiffs still prefer filing a small claims lawsuit, mainly because standard civil proceedings involve significantly higher costs and take much longer.

For example, the fee for “standard proceedings” is 2.5%, while in small claims court, it is up to 1%. Standard proceedings can take years, while a small claims lawsuit takes an average of six months.

Standard proceedings incur significant legal representation costs (lawyer’s fees), while in small claims court, both parties proceed without legal representation, saving this expense.

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