When Unexpected Events Occur
With the Boston Marathon bombings in recent memory, there are many questions still left unanswered. Some questions are personal. So many of us know people who escaped danger that day - our own Rich Webber was there – but there are countless others whose lives have changed.
Some remaining questions are business related. What would it be like if such an incident happened here? How would it impact you, your employees, and your clients? How would your insurance coverage protect you?
As a business owner, you buy insurance to protect yourself from the unexpected. The Boston bombings were certainly unexpected. Many businesses near the blasts were closed for days, suffering substantial property and revenue loss. Unfortunately, due to insurance coverage changes in the wake of 9/11, some of these businesses may not have those losses covered.
In 2002, Congress passed the Terrorism Risk Insurance Act. This legislation made terrorism coverage separate from existing policies, requiring businesses to pay extra for it. The idea was for businesses to have access to terrorism coverage and for insurance companies to have some plan for compensating them with the government backing them up.
Now the government is in a quandary. Businesses that opted not to purchase terrorism coverage and that suffered losses from the marathon bombings won’t be covered if the Federal government officially declares that the bombings were an act of terror. If the government does not deem it an act of terror, standard insurance would cover damages.
Marathon Sports on Boylston Street was closed for more than a week, typically one of their busiest of the year. The Rattlesnake Bar lost in excess of $80,000, as patrons ran instead of stopping to pay. Click here to read more about the business owners affected.
Many of the businesses closest to the blasts do not have terrorism coverage. Although city officials have vowed not to let anyone go out of business, insurance companies may not be willing to budge on claims if the businesses declined terrorism coverage.
While it was inspiring to see the city rally, many businesses are still in a holding pattern as they wait to learn if the government will indeed declare the bombings an act of terror. It is one of many factors that will determine the tragedy’s overall impact in the months and years to come, as businesses, and citizens, seek to regain momentum.
If you have any questions about terrorism coverage, please call me and I'll be happy to answer them.