Call it terrorism…..does it matter?
April 16, 2013 Leave a comment
Monday, Boston was rocked by explosions during the Boston Marathon. In the hours after the explosions, the usual political suspects appeared on the news and gave their reactions. Then, news stories appeared with reactions to the politicians’ reactions and then there were reactions to the reactions to the reactions. That is pretty much how news works these days.
As reported by Slate, CNN, and CBS (just a few of many), there appears to be some controversy regarding President Obama’s failure to use the word “terrorism” during his initial response. Take a look at what a simple google search of Obama+terrorism brings up.
Given that no terrorist organization has claimed responsibility and no suspect has been named, what is the rush to call this an act of terrorism? It was no doubt terrible and created terror in Americans, but was the bombing an act of terrorism? Time will tell, but there is no reason to jump to the terrorism conclusion. Labeling an event terrorism has consequences and those consequences can be significant for property owners.
A typical “terrorism exclusion” in a property insurance policy looks something like this:
This form does not insure loss or damage caused directly or indirectly, in whole or in part, by “terrorism” or by any activity or decision of a government agency or other entity to prevent, respond to or terminate “terrorism”. This exclusion applies whether or not there are one or more other events or causes (whether covered or not) that contribute concurrently or in any sequence to the occasioning of the loss or damage. If any portion of this exclusion is found to be invalid, unenforceable or contrary to statute, the remained shall remain in full force and effect.
Prior to the September 11, 2001 World Trade Center disaster, terrorism coverage was frequently included in property insurance. Since that horrible day, property insurance policies typically exclude acts of terrorism unless separate terrorism coverage is obtained.
For many businesses operating on thin margins, terrorism insurance is prohibitively expensive. End result, a business could be out of luck if the government labels an event an act of terrorism and the business doesn’t have terrorism insurance coverage. With the stakes so high, why not take the time to get it right rather than worrying about the labels applied?