Businesses Brace for Rise in Terrorism Insurance Costs

BOSTON — Forced to close for up to ten days after the Boston Marathon bombings, businesses on Boylston Street and throughout the area suffered from property damage, lost income and the absence of the vital marathon crowds that constitute a huge part of the year’s business. To make things worse, business owners are now learning that they are unlikely to receive insurance payouts unless they specifically purchased terrorism insurance in addition to their standard plans. Thankfully, America’s major insurance providers are there to be good neighbors, keep clients in good hands, and offer a variety of similarly expensive platitudes.

“We offer extraordinarily attractive business insurance solutions at the lowest rates possible, because we truly care about our clients,” said James Tollman, an agent with All State. “We also provide exceptional terrorism coverage. It’s a bit more expensive now that demand is up, but hey, sometimes that’s what you have to do to protect capitalism.”

As a result of the Terrorism Risk Insurance Act (TRIA), passed in 2002 after the $40 billion or so in damages faced by insured businesses following September 11th, private insurance companies are not required to cover terrorism costs, unless the client pays extra for coverage.

This means that the financial fate of the businesses that haven’t paid for terrorism insurance rests with the federal government. If key government officials declare that the business interruption was, in fact, caused by a “terrorist act,” then the insurance companies are not responsible for payouts.

Meg Mainzer-Cohen, head of the Back Bay Association, which represents local businesses, said she is working with local authorities to convince insurers “to be generous.”

“Of course we are here for the people of Boston,” said AIG Representative Bob Stanworth, stifling laughter when asked what AIG would do to help the suffering Boston businesses, many of which are already donating their diminished profits to relief funds for the bombing victims. “Our company is founded on goodwill and our clients’ best interests. That being said, paying for damages when we don’t technically have to…would set a dangerous precedent.”

Tony Caz, owner of the Rattlesnake Bar & Grill on Boylston Street, did not purchase terrorism insurance and expects to be on the hook for about $80,000 in lost revenue. After the bombs went off, he said, patrons fled, understandably without paying their tabs. The restaurant, like many others, remained closed for over 10 days, and all the food products inside went bad and had to be discarded. Terrorism insurance for Mr. Caz would have cost around $9,000 per year.

“We’re probably going to try and get that number [$9,000] to double,” said Todd Cashmore of Liberty Mutual. “Terrorism is a hot product right now, and after all, this is capitalism. If no one profits, then the terrorists have won.”