Orlando Attack Rekindles Focus on Terrorism Insurance
Awareness of the need for terrorism risk insurance has increased in the wake of the recent mass shooting at a nightclub in Orlando, Florida, that left 49 people dead and scores injured. Since even the most thorough security setup cannot prevent all terrorist attacks, Robert Hartwig, president of the Insurance Information Institute (I.I.I.), said that purchasing terrorism insurance may be essential for businesses.
“Unfortunately many businesses forgo it, thinking it can’t possibly happen to them, but it can,” Hartwig said. According to Hartwig, approximately 62 percent of larger businesses are covered by terrorism insurance, but many smaller businesses are not, because they assume they cannot afford the coverage. Property damage, third-party liability and workers’ compensation provide coverage for most incidents, but large incidents can be devastating financially.
Hartwig said that a terrorism risk insurance policy “provides the peace of mind particularly in the event of a larger scale attack.” Although some commercial policies exclude terrorism, specific terrorism “coverage can be purchased for fairly nominal costs particularly outside big urban centers for a few hundred or a few thousand dollars a year.” An incident has to be certified as a terrorist act and result in at least $5 million in damages to qualify for coverage under the federal Terrorism Risk Insurance Act (TRIA), so the Orlando attack is unlikely to be covered by TRIA. Standalone terrorism coverage is available to relieve any uncertainty about the extent of the coverage under TRIA.