This innovation is starting to expand in the United States, principally as an income coverage within “active shooter” policies. One such policy, provided by MacGowan Program Administrators, includes coverage for “building replacement costs,” even if the building is not damaged.
As another example, New Paradigm Underwriters, a Florida- based insurance intermediary, offers terrorism insurance that covers income losses, even in the absence of physical damage, due to events that occur:
Also, coverage is available for loss of attraction arising from acts of terrorism that affect the distribution of electrical power.
The more the value of a business or property depends on the attractiveness of its general location, the more important loss of attraction insurance becomes. Prospective buyers should be prepared for several considerations when shopping for the coverage.
First off, buyers need to be clear on what constitutes a loss under the coverage.
Some provisions may cover only “non-damage denial of access,”meaning that incidents or public authorities must actually close off access to insured premises before coverage is triggered. Losses from the mere presence of demonstrators, disturbances, or threats — no matter how disruptive or intimidating to patrons —might not be covered.
Along that line, policies may specify whether triggering events, such as the occupation of premises by demonstrators, must be unlawful, and whether the insured’s actions in response are forced or voluntary.
As for the perils triggering coverage, some provisions may still be subject to the condition that a loss result from damage by an insured peril, but the general point of the coverage is to move beyond that limitation. In some cases, policies will only respond to losses in the wake of a violent act, human or natural; in other cases, the mere threat of an act may be sufficient to trigger coverage.
Insurance buyers should also be aware of casualty thresholds and ceilings sometimes found in “active shooter” insurance policies. Some policies do not respond to events where the number of victims is less than three or four, the implication being that the policies are intended to respond to “mass shootings.” Conversely, some policies do not respond if the number of casualties exceeds a certain number.
In almost any event, there will typically be a time element deductible (a specified number of hours or days) and a time limit (in days or weeks) for coverage, plus a limitation on the geographic area and/or locations where it will be applied.
Unfortunately, there’s a lot to think about when you have to consider the unthinkable.