Insuring Against Terrorism: New Coverage, New Problems


The events of September 11 have changed the way that people view everyday life, including real estate professionals and attorneys. Lenders and landlords are demanding terrorism insurance protection, and the availability or prohibitive cost of coverage is causing increasing concerns in the industry. Prior to September 11, terrorism coverage was often free, since the risk of terrorist attack on United States soil seemed remote. Since September 11, some insurance companies have elected to stop providing basic property coverage because certain states, like New York, compel licensed insurers to provide terrorism insurance. Insurers in other jurisdictions (and unlicensed New York companies) began to offer limited terrorism coverage at inflated cost. For example, the maximum terrorism coverage policy available to the authority operating the Golden Gate Bridge was $100 million, far short of the $2 billion replacement cost for the bridge. Most importantly, the annual premium for this fractional amount of coverage was $1.7 million.

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