The horrific events, and the following heroism that transpired on Monday April 15, 2013 will forever be engrained in our memory. The Boston Marathon Bombing will always be one of “those times” that we remember where we were, who we were with, and who we were worried about. The three precious lives that were lost and the many more that were injured will forever be in our hearts here at Downey Insurance Group.
After the shock wears off, many of us, even our “non-insurance industry” friends will turn to the facts and processes of what comes next. The big insurance questions seem to revolve around terrorism coverage and the businesses affected, and the options for legal recourse available to those injured and the families of the deceased.
Will Terrorism Coverage apply to the Boston Marathon Bombing?
President Obama has called this heinous act an “act of terrorism” but for Insurance purposes there are criteria set by TRIA, the Terrorism Risk Insurance Act, that was passed by President Bush in 2002 after the 9/11 terrorist attacks, that will determine whether this federal program will be able to be utilized. The act must be deemed “A Certified Act of Terror” by the Secretary of State, the US Attorney General, and the Secretary or Treasury. Also losses would have exceed $5,000,000 in order to be eligible for a certified act of terrorism classification.
At this time insurance professionals are not expecting the Marathon Bombing to qualify for a certified act of terror classification.
What does this mean for the businesses affected?
This means that the insured’s Massachusetts Business Owners Insurance Policy or Massachusetts Property Insurance Policy should respond as business as usual. The property damage caused by the bombing will most likely be covered as an explosion. “Explosion” is not explicitly excluded on the majority of Massachusetts Commercial Insurance Policy’s.
What may not be covered, and what may do even more damage to businesses than actual property damage, is what is called “Business Interruption, or Loss of Income.”
Businesses that have property damage to their business may have some coverage here, because it would be considered due to a covered cause of loss, the explosion. But, the businesses that do not have property damage to their business may have a more difficult time recovering from this tragedy. Their loss of “business income” will most likely not be covered by their MA Business Owners Insurance Policy or Property Insurance Policy.
What about the injured parties and the families of the deceased?
A fund for the victims and their families have been set up, called the One Fund Boston, to date they have raised more than $10 Million Dollars! It is unclear if accepting money from the fund will waive their right for litigation, or how this money will be distributed among the victims. The Boston Athletic Association has not released any information on their Liability Insurance Program, or what their coverage limits and exclusions are. I am sure litigation is going to be inevitable in this case, and we will hear more about what will be available for the victims in weeks to come.
