Preparing for the Unthiinkable A look at the post 9/11 insurance industry

Since 9/11, terrorism has become a palpable new threat against the lives and property of American citizens. Not only has our peace of mind been compromised, but the attack on the WTC has affected lives in other, less obvious ways.

Consider the issue of insurance for a moment. The cost of the damage done on September 11 is estimated at close to $50 billion–and has thrown the insurance industry into crisis as the country tries to assess the scope of this new threat. While we’re still reeling from the blows dealt us this past fall, it is crucial that building managers and shareholders understand how their building’s insurance policies may be affected by the upheaval in the industry so that they can effectively protect their property–and their budgets.

What it Means

Before September 11, terrorism was not really considered a serious threat on US soil. As a near-inconceivable happenstance, terror was not explicitly addressed in most standard insurance policies. "In the past, terrorism was not differentiated from vandalism," says Alex M. Seaman, senior vice president of Kaye Insurance-Long Island, "and few major carriers attempted to exclude it."

Although virtually every insurance policy contains a war exclusion, this did not apply to the property damages caused by the WTC attack. Those damages were allegedly caused by individuals–rather than by a sovereign nation–and therefore they did not fall within any policy’s war exclusion clause.

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