On Monday, April 15th two bombs were detonated on Boylston Street at the finish line of the Boston Marathon.
The fallout and ensuing manhunt forced many businesses to close their doors and now many are finding out that terrorism exclusions built into many policies will deny the businesses any insurance coverage for lost sales.
The Congressional Research Service estimates that these terrorism exemptions are written into approximately 4 in 10 commercial insurance policies and that it allows insurers to reject business interruption claims made by over 400 businesses that have been closed since the bombings.
Boston City Councilor Michael P. Ross told the Boston Globe, “The only ones that do have terrorism insurance are the large office buildings. Certainly the mom and pop businesses are not covered, so that means that this is a straight loss for them”. After the terror attacks of 9/11 when hijackers steered large commercial planes into the World Trade Center and the Pentagon, insurers sought to exclude acts of terror from business interruption policies. In 2002 a program was created called the Terrorism Risk Insurance Act in which the federal government shares costs with private insurers to help businesses affected by acts of terror.
While some businesses have made a point of including terrorism coverage in the business insurance policies, many of the businesses in Boston were caught off guard during one of the busiest retail shopping times of the year. Sheila Dillon, the city’s Neighborhood Services director, also told the Boston Globe, “Some businesses don’t seem to know exactly what they have and we’re starting to work with them on those issues”.
It is estimated that only 60% of American businesses are insured against damages and losses resulting from a terrorist attack. However, since 9/11 more businesses are purchasing terrorism coverage since prices for the added insurance have declined. If you own a commercial business it’s worth looking into terrorism coverage and a call to your local insurance representative can help you determine the extent of coverage your business needs.