Traditionally, insurance professionals and buyers have focused on how to protect the company from unintended events that can lead to property damage, financial loss, injuries or even death. Over the last few years, deadly active assailant events have added a new area of concern.
Real estate owners are especially vulnerable to active assailant events. Owners now have a need to determine the best policies and practices to protect the lives of those who service their company as well as their tenants, residents and visitors. Coverage gaps have surfaced in conventionally placed coverage.
Terrorism policies cover acts of terrorism which typically target specific buildings or locations and require property damage for coverage to apply. The standard terrorism policy also requires that the motive be ideological, political or religious in nature. Active assailant events may have a personal or unclear motive.
From a general liability perspective, active assailant events do not always fit the definition of “accident” to trigger coverage. Also, general liability coverage was not designed to respond to costs for preventing an event or to provide immediate assistance after an event. General liability coverage requires a written demand or a claim. After an active assailant event, no one wants to wait on the claim. Companies want and need to reach out and start helping the victims and the community to recover.
Property policies only pay for repairs or replacements. Some property becomes unusable because of mental anguish (e.g. Sandy Hook) or the organization wants to tear down and rebuild, refurbish or restore the inside to a much greater extent than the repairs require.
Finally, workers compensation policies in most states only cover employees for injury or death from a shooting if it is not personal and is related to employee’s work. A domestic violence situation would not be covered. If the active assailant issue was deemed to be not work-related, there would also be no coverage for dependents or beneficiaries who might bring action against the organization.
The gaps in terrorism, general liability, property and workers compensation coverage provided insurers an opportunity to offer Named Perils coverage for a new category of risk. The coverage is called a variety of names by insurance carriers – active shooter, workplace violence, active assailant, deadly weapons protection, but the policies provide similar coverage. Most policies offer five basic coverage components.
- Prevention Service – Evaluation of the security protocols, action plans, including incident awareness and responding to an incident
- Crisis Management – Counseling and communication strategies, temporary security enhancement (e.g. armed or unarmed security guards), public relations, media management, and funeral expenses
- Indemnity for Losses – Primary coverage for lawsuits arising from harm caused by attacks, accidental death and dismemberment coverage, medical payments as well as coverage against the threat of a deadly weapon attack
- Business Income and Extra Expense – These events are expensive. This coverage can help the business owners stay in business. Many organization’s location close for weeks, even months after an active assailant event
- Property Coverage – Primary physical damage caused by the event. Includes mental anguish-related tear downs or remodeling, demolition, clearance and memorialization costs, ingress/egress and prevention of access by civil/military authorities as well as extra expense to resume operations
Underwriting factors will include the location of the risk, type of occupancy, security, human blueprint and security details (e.g. ease of access) etc. Coverage is inexpensive currently and policy minimum premiums are as low as $1,000 for smaller risks.
For further information and to see if you qualify for a free Malicious Attack Risk Evaluation, contact the AssuredPartners Real Estate team.