The Alliance of American Insurers has issued a bulletin noting that Virginia Governor Mark Warner has signed into law the nation’s first piece of legislation aimed at changing the Standard Fire Policy Act related to commercial insurance policies. The changes, contained in HB 2606, were unanimously passed by the legislature and will take effect July 1.
“Following the events of Sept. 11, 2001, insurers realized that terrorist acts had the capability of producing not only horrific initial damage to businesses and property, but also could result in fires that followed the initial event – fires that could potentially cause even more devastation that the primary act,” stated John Lobert, Sr. VP of state government affairs for the Alliance.
“While the federal government passed the terrorism backstop, it did not preempt laws regarding fire losses that could follow an act of terrorism. These changes in Virginia allow insurers to exclude coverage of such fire damage following a terrorism act if the insured has turned down terrorism coverage under the federal program. We are pleased that the governor and lawmakers in Virginia have taken the lead on this issue, and we urge other states to follow their lead to ensure the stability of the commercial insurance marketplace.”
Lobert also noted that similar bills have been introduced in Connecticut, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire and Oklahoma. In addition, industry efforts to change the law are underway in Illinois, Louisiana, New Jersey, Pennsylvania and Washington as well as the other 15 states that require the New York Standard Fire Policy.