Active assailant events impact commercial real estate owners. However, according to BISNOW, landowners and landlords have faced civil suits and lost income over the last two decades because of active assailant shootings and other violent confrontations. The probability that such an event will strike one of your properties is low. However, strengthening your risk management approach and considering your insurance options can help ensure you’re prepared if a violent event does occur.
A Historical Look at Active Shooter Events Impacting Commercial Real Estate Owners
Let’s review a few active assailant events that have involved commercial real estate owners in the US.
The 2017 Mandalay Bay Hotel shooting in Las Vegas, arguably one of the most deadly events of this type in US history with 58 killed and 413 wounded, settled with thousands of defendants for between $735 million and $800 million. According to the Las Vegas Review-Journal, it took the hotel nearly two years to “regain its footing.”
At a smaller event at the Capital Gazette newspaper in Annapolis, Maryland, an assailant shot and killed five people and wounded two others. Responding officers evacuated adjacent businesses, which displaced over 170 people. The shooter had a history of grievances with the newspaper.
A Kroger grocery store in Kentucky was the scene of a shooting event, leaving two killed. In a Tallahassee, Florida, yoga studio, a gunman killed two participants and wounded five.
Whether a disgruntled employee or an aggrieved customer initiates the threat, active shooter events can occur on any type of commercial property.
How the Insurance Industry Pioneered Active Assailant Coverage
Active assailant coverage is a unique coverage developed within the past three years. These policies arose when insurers who wrote kidnap and ransom coverage or terrorism coverage found these policies did not address the fallout from the growing instances of mass casualty events. Several carriers developed a policy that would address many of the losses specific to mass killings. As the incidents continued and the policies matured, carriers tailored coverage to insure coverage for a variety of unique circumstances arising from the devastating events.
General Liability Concerns – How to Mitigate Your Liability Exposure
When determining liability, the main concern is foreseeability. Could your managers have foreseen a threat like an armed assailant, even if that weapon is a vehicle or other non-firearm event? Beginning in the 1990s, school architects began to design school buildings to help protect children from drive-by shooting incidents. This kind of environmental building design is now a well-established component of architecture. Hardened entrances, automatic door locks and escape routes are common today, whether designing or retrofitting a building.
Experts have created other strategies for both reducing liability and responding appropriately to active shooting incidents. Creating an active assailant plan for your business or property can help reduce liability should an incident occur. The US Department of Homeland Security offers an active shooter action plan template on its website.
However, mitigating your liability exposure and protecting your assets now include this choice – Should my organization consider an active assailant insurance policy?
What is Active Assailant Insurance?
Active assailant coverage provides a variety of important coverages that may begin where your current commercial insurance policies end. Here are several important coverages found under the typical policy.
Property or physical damage coverage – This can include covering costs to repair damage, to provide structural security and even to tear down and relocate a building in the aftermath of an event. For example, after the Sandy Hook shooting, officials decided to relocate the building to honor the victims of the mass shooting. Your commercial property insurance would not provide that type of coverage.
Legal liability coverage – Absent any specific exclusions, commercial general liability policies (CGL) would respond to third-party claims after an active assailant incident. Risk & Insurance recommends, however, you “Don’t assume general liability policies will cover everything.” CGL policies do cover both third-party liability and accompanying defense costs.
Crisis management response and public relations – Dealing with the fallout, including damage to a business’s reputation, can be costly after an incident. Most active assailant policies provide these types of services. They may also provide additional advantages – pre-incident assistance in developing your active assailant plan and helplines if you believe a hostile customer or employee situation is developing. Additionally, if your brand suffers, your policy may provide coverage to help you retool your image post event.
Business interruption coverage for lost revenue – After a catastrophic event like this, the aftermath may force you to close your business or restrict access for days, weeks, or in the case of the Mandalay Bay shooting, months. Few businesses can withstand that type of closure. In most cases, your normal business income policy will not respond because the underlying event is not one of the perils insured against in that policy.
Medical expenses, funeral costs and counseling services – In the aftermath of a shooting or other hostile event, associated costs may continue for months or years. Active shooter policies provide coverage for post-traumatic stress counseling and other medical expenses after an event. Some policies even offer coverage for post-loss job search costs to replace employees who choose not to continue working at the site.
What to Consider When Shopping for Active Assailant Coverage
Only a few carriers initially offered active assailant policies. Today, even risk retention groups are offering these policies. On the liability side, the coverage forms are not standard Insurance Services Office forms. Rather, they can be either standalone policies or tailored coverage endorsed onto terrorism and sabotage/threat policies. It’s important you work with an insurance broker who can approach several markets on your behalf and determine which policy forms and conditions offer the broad coverage you require.
Who’s Buying Active Assailant Coverage?
Today, the rush to buy this coverage is on. Why? The probability of an active assailant attack on your properties may be low, but if an incident occurs, the costs will be high. The attractive pricing of these policies make them a solid choice. According to many insurance experts, all types of business owners are not only obtaining quotes for coverage, they’re buying it. According to Paul Marshall of McGowan Program Administrators in this webinar, “It’s becoming almost a main-street coverage.” Small day care centers, churches, synagogues, auto dealerships, and bars and taverns in major urban areas, all these types of business owners are purchasing coverage. For the commercial real estate owners who may have many types of tenant occupancies, an active assailant policy may be worth consideration.
For more information on active assailant coverage, contact us.