The survey showed that more than one quarter of respondents were unable to obtain terrorism insurance at any cost. Of the remaining 74% who have been able to secure coverage, a full 80% incurred higher premiums, caps on coverage, higher deductibles, cancellation clauses of 60 days or less, and/or exclusions for chemical, biological, or radiological acts. BOMA also says that the premium increases that building owners incurred ranged from an average low of about 20% to a high of 200%. In addition, the survey showed that the vast majority of building owners, 80%, are planning to pass at least some of the cost on to their tenants.
When asked which factor negatively affected their ability to purchase terrorism insurance, 69% of survey respondents indicated that it was more difficult to purchase insurance for portfolios due to the building’s geographic location.
When it came to negotiating more favorable rates and/or terms, BOMA says that half of all survey respondents cited that nothing helped, while 28% cited that providing insurers with detailed building data and insurance history helped. Twenty-four percent cited that increased security helped somewhat. Other factors mentioned included long relationships with insurers and timing of renewals.
“This survey clearly confirms that insurance coverage for terrorism events is largely unavailable at any price, and the product that is available is faulty and does not meet the needs of building owners and managers,” said BOMA International president Larry F. Soehren. “As we continue to address these issues on Capitol Hill, it is absolutely necessary for Congress to step forward swiftly to provide a federal backstop in the event of future terrorist attacks.”
Publication date: 10/07/2002