Is Your Business Prepared for Terrorism?

By Floyd Arthur

Is Your Business Prepared for Terrorism?

On December 2, 2015, two heavily armed perpetrators opened fire at a

Christmas

party for employees of the San Bernardino County Health

Department in San

Bernardino, California, killing 14 people and wounding 26. The

attack reignited fears

of global terrorism here in the United States, and brought the city

of San Bernardino

to a standstill as law enforcement officials scrambled to find the

people and the

motives behind the attacks.

Terrorism Insurance

The attacks also crippled the San Bernardino County Health Department, which faced

the nearly impossible task of maintaining normal operations with

almost 40 fewer

employees than it had on hand before.

To assist the beleaguered health department, Gov. Jerry Brown of

California declared

a state of emergency in San Bernardino County on December

18. The declaration

allowed the state to send in replacement employees until the

injured staffers return

to work and empowered the state Office of Emergency Services to

provide additional

assistance to the the county and the citizens who were impacted by the

event.

How Terrorism Can Impact Your Business

The tragedy in San Bernardino demonstrates all too well how a

single act of terrorism

can bring a business to its knees. Although terrorist attacks are,

fortunately, rare in

the United States, those that have occurred have had devastating

consequences -- not

just in terms of lives lost and people injured, but in the amount of

damage to

surrounding property. Following the Boston Marathon bombing in 2013,

for example,

Massachusetts’ largest insurers paid out over $1.9 million in property

damage claims.

The cost of the World Trade Center attacks in New York was $31.6

billion in property

damage alone.

Further, a terrorist attack can interrupt normal business

operations for many days or

weeks as law enforcement and federal investigators sift through

the site for clues. If,

as in San Bernardino, a large number of employees or key

personnel are injured in

the attack ,even lengthier interruptions can ensue.

How Terrorism Insurance May Help

In the wake of the September 11, 2001, terrorist attacks in New York,

Pennsylvania

and Washington D.C., Congress passed the Terrorism Risk Insurance

Act, which

created a federally-backed insurance program to assist businesses who sustained

property damage due to terrorism. The program, which was

reauthorized by the

Obama administration in 2015, establishes a dollar threshold above

which the federal

government shares a portion of the cost of payments made by insurers

to businesses

that suffer damages in a terrorist attack. The law also mandates that

all commercial

insurers offer the coverage to all businesses and certain other types

of commercial

enterprises they insure.

The TIRA, however, has some significant limitations. For example,

an attack must be

certified as an act of terrorism by the Secretary of the Treasury and

the Secretary of

Homeland Security before the federal government steps in.

According to the language

of the original law, this means that an attack, whether perpetrated by

foreign or

domestic agents, must be deemed:

“an act that is dangerous to human life, property, or infrastructure and

to have

resulted in damage within the U.S. (or outside the U.S. in the case of a

U.S.-flagged

vessel, aircraft or premises of a U.S. mission). It must be committed as

part of an

effort to coerce U.S. civilians or to influence either policy or conduct of

the U.S.

Government through coercion. “

Further, as of 2015, the aggregate amount of property damage claims

suffered by the

insurance industry due to an attack must be at least $100 million before

the

government will certify an attack as a terrorist act. That amount

increases by $20

million per calendar year to a maximum of $200 million in the

year 2020.

Do You Need Terrorism Insurance?

The limitations of the federally backed terrorism insurance

program apply primarily

to insurers: They determine who bears the cost -- the insurer or the

federal

government -- when an act of terrorism causes property damage

to a business or

results in bodily injury to its employees. Furthermore, damages

due to acts of

terrorism are specifically excluded from many property and casualty

policies, so a

business without this coverage could find itself in dire financial

circumstances in the

event of a terrorist attack.

If you are interested in learning more about the benefits of

terrorism insurance, talk

with one of our commercial insurance experts today. We will

help you design an

insurance program that addresses all of your risk in the most

comprehensive and

cost-effective way. Just call us at 516-292-3780 between 9 a.m. and 6

p.m. to schedule

an appointment, or request a free consultation online now.

Visit www.CarmooGroup.com