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How Insurance Coverages Apply to an Assault and Hostage Crisis

Assault & Hostage Crisis Insurance

By Alyssia Totten –

In 2017, there were 344 reported mass shooting events, and at least 15,549 gun deaths. In 2018, there have already been 3,284 deaths and 5,739 injuries. In addition to the terrible loss of life, there is often a heavy financial toll on the victims, the businesses and the institutions involved. Businesses impacted by the crisis typically feel they have a threefold responsibility:

  1. Help the victims
  2. Help the community
  3. Ensure business continuity

Once the terrible shock of an assault or hostage crisis begins to subside, those involved often turn to their insurance coverages to help cover the significant financial costs caused by the crisis. Some insurance policies may cover little, while others can cover the expenses of the victims, expenses for their families including hotel and other costs, counseling, security, legal costs, interruption to the business, property damage and even spoilage to food or inventory depending upon the type of business. The specific type of coverages are critical, in the event a crisis like this happens.

While it is not possible to predict if and when a business will experience an attack, an FBI study found that 70 percent of active shooter incidences between 2000 and 2013 occurred in either a commerce, business or educational environment. The incidences were not limited to any particular geographic area, as they occurred in 40 out of 50 states. Sadly, these tragedies can happen anywhere and at any time, and are increasing in frequency. Businesses can, however, take steps to protect both people and property if the worst was to happen, as assault and hostage crisis insurance policies (AHC) can cover a wide range of exposures in the event of an active shooter attack.

How would you protect your business from this increasing risk, and ensure you could help the victims, help your community and also ensure your business continuity? Though traditional business policies may seem to cover costs in the event of a crisis, the details are critical, as active shooter attacks may not be covered under the following scenarios:

  1. Commercial General Liability

General liability provides coverage when it is alleged that a third party suffered personal injury or property damage as a result of the negligence of the assured. However, coverage may not respond unless the insured is deemed to be liable or negligent for the event. Typically, there are stated exclusions in a commercial general liability policy which may include employee as the perpetrator, damage to property, business interruption or terrorism.

  1. Terrorism Exclusions

If the active shooter event is certified as a terrorist attack, terrorism or war exclusions could apply. One of the key advantages of AHC coverage is that is will provide primary cover in response to such an event. Under AHC coverage, the definition is clarified in order to eliminate confusion after the event has occurred.

  1. Dedicated Crisis Management and Victim Services

General liability does not provide access to dedicated crisis management advice which is critical in managing the event. AHC insurance will also cover public relations costs that limit damage to the organization’s reputation, coverage for victim counseling and, in the worst case scenario, funeral expenses.

  1. Property

Property coverage typically covers physical damage and bodily injury sustained as a result of the damage sustained. AHC coverage for bodily injury is non-physical damage, such as injuries sustained not on the property due to evacuation of the premises. It would also cover 90 days revenue loss due to business interruption after the attack, as well as other coverages that would not be covered under typical property damage policies.

  1. Workers’ Compensation

Workers’ compensation coverage may not respond to a personal attack on an employee if the motive is not related to the workplace. It will also not cover an attack against customers or guests. Typically, worker’s compensation coverage will not reimburse extra expenses required to recruit or train new employees that are needed to replace those unable to work after an attack. Salary continuation benefits are also state-specific and generally speaking, do not fully indemnify the victims.

  1. Business Income Loss

Traditional business insurance may not cover an organization if it needs to close or relocate following an attack unless the event results in physical damage to the property or its contents.

Assault and hostage crisis insurance is an evolving risk environment with a growing demand for risk transfer solutions. AHC coverage encompasses financial protection, tangible support in the event of a threat or actual attack, and access to coverage that is often excluded in traditional insurance policies. Securing AHC insurance will give your company the confidence that you have addressed the key concerns related to financial protection, duty of care and reputation damage control.

AHC coverage allows your business to proactively manage a crisis situation should it occur, helping victims and your community, and helping ensure the continuity of your business. For more information about Assault & Hostage Crisis insurance protection, contact the experts at Lanier Upshaw.