Understanding Waivers of Subrogation
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While the U.S. has escaped a major terrorist attack for a few years now, the threat is always present as there are many organizations and lone wolves that would like to do harm to people and property.
Besides the risk of loss of life and injuries, an act of terrorism can sink a small or mid-sized business. That’s because the standard business property insurance policy typically excludes coverage for terrorism.
There are usually two categories of effects from terrorism on enterprises:
- Businesses that suffer direct damage to their property and assets from a terrorist attack.
- Businesses that suffer indirect damage, such as business interruption as a result of being forced to shut down due to their proximity to an attack or an attack affects part of a supply chain the business relies on.
Meanwhile, payouts are also dependent up on how the government classifies an attack. Businesses with terrorism coverage have to wait for the U.S. Treasury Department defining an attack as either terrorism, civil disturbance or political violence.
All of these can cause businesses to shut down. One-third of insured losses resulting from the September 11 attacks in 2001 were from business interruption, more than any other coverage.
Fortunately, the cost of terrorism coverage is relatively low compared to other lines of insurance.
Companies with a total insured value of less than $100 million paid a median of $62 per million in coverage in 2018, according to the “2019 Terrorism Risk Insurance Report” by risk-management research company Marsh. Prices differ depending on the industry and location, with construction paying some of the highest rates.
Some issues to consider:
- Is terrorism coverage worth it for your business? It’s up to you to decide if it’s worth it. There is a wide range of factors that you’ll use to determine whether this coverage is wise. First, consider your location. If you’re in a small town, then your need for this coverage is likely much lower than a company located in New York City.If you are concerned, you can start by analyzing your current insurance coverage and determine if you are protected in the event of a terrorist attack. Many businesses don’t know they have gaps in their coverage for terrorism.
- Consider the cost. Cost is another issue, though it will be tied to your location. In a small town you might pay as little as $25 for an entire year’s worth of coverage, but in larger metropolitan areas the rates are typically higher, although not by much.
- What’s covered by terrorism coverage? A commercial terrorism policy covers damaged or destroyed property — including buildings, equipment, furnishings and inventory. It may also cover losses associated with the interruption of your business. Terrorism insurance may also cover liability claims against your business associated with a terrorist attack.
The takeaway
As with any type of coverage, the key to deciding if you need to add terrorism insurance comes down to a simple risk assessment. What do you stand to gain if you have the coverage and you need it, and what you stand to lose if you need it and don’t have it?
You can start by reviewing your exposures with us to determine the best way to handle this issue. We can help you make a decision that’s right for your company.
BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.
Special Contractor Insurance Programs (NY, NJ, CT) – We we have 60+ insurance companies to market your general liability, umbrella liability, business auto, workers compensation, bid & performance bonds and group health coverages. We help contractors set up proper risk transfer. If you’re a contractor we offer extensive information about insurance markets, coverages, risk transfer, subcontractor screening, ways to lower your insurance costs.
BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Replacing policies that are being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits; 9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.
If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.
Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538
e-mail: bgesgroup@gmail.com
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