Unfortunately, the threat of terrorism and other acts of mass violence is ever-present. Whether impacted directly or indirectly, when these acts do occur they can have a significant impact on a company’s property, employees and its ability to trade.
Insurance can play a role in mitigating the fallout from these malicious events. The two most common policies available for businesses are terrorism & sabotage insurance and active assailant insurance.
Let’s look at the difference between the two:
What is the purpose of each type of policy?
Standalone Terrorism & Sabotage policies have been common since the 9/11 terrorist attacks. Their primary purpose is to protect a company’s assets and income in the event their business is the target of – or impacted by – an act of terrorism.
While similar in some respects, Active Assailant insurance has emerged in recent years to offer coverage for malicious incidents not designated as acts of terror, with a focus on incident response costs and potential legal liabilities.
How do you define an act of terrorism, sabotage or active assailant attack?
In short, an act of terrorism or sabotage is a violent or subversive act committed for political, religious, ideological or similar purposes.
Alternatively, an active assailant event is considered to be any premeditated physical attack with the intention of killing or causing bodily harm, including attacks using any handheld weapon, explosive device, acid or vehicle. Active assailant events aren’t restricted to political, religious, or ideological events.
What are the differences in cover?
The difference in cover between a terrorism & sabotage insurance policy and an active assailant insurance policy largely comes down to the likely impact of each type of event.
For instance, a traditional terrorism & sabotage insurance policy will focus primarily on property damage and business interruption cover. The assumption is that an act of terror will most likely cause damage to a business’ assets or property or impact their ability to trade for a sustained period of time. It has a narrower scope of what events will trigger the policy, but it allows for deeper protection of the insured’s assets and income which reflects the greater loss from physical damage that can occur in a traditional terrorism event. A good policy will offer sub limited cover for the restriction of access to premises, as well as contingent business interruption and utilities cover to help protect the business if its trading partners or key services are impacted by an attack.
In the case of an active assailant event, however, the cover is designed to respond to a much broader definition of events but offers more limited cover for property damage and business interruption. Instead, active assailant insurance products assume the primary impact of an attack will be to the victims, customers and employees, and is designed to provide cover for victim and organization support costs and crisis management costs, as well as the insured’s legal liabilities. Loss of attraction is also included within the provided business interruption cover to help the insured recover from any prolonged impact to revenue.
What does CFC offer?
CFC has been writing standalone Terrorism & Sabotage policies in the United States and around the world for nearly a decade and is one of the first insurance providers to offer Active Assailant coverage.
To learn more about CFC’s suite of terrorism products visit our website or contact our underwriters at terrorism@cfc.com.
