Questions Raised on Ground Zero Coverage

An article in the Friday edition of the New York Times raises troubling questions about the insurance coverage on the contractors and their employees, who’ve been working around the clock cleaning up the debris at ground zero – simply put, there isn’t any, or at least not much.

The site of the World Trade Center presents a scene of devastation from the worst disaster in U.S. history that is hard to describe, but thanks to the efforts of four main contractors and 200 subcontractors the 16 acres are slowly being cleared, a prerequisite for any rebuilding. However, according to the Times no insurer will cover the companies, their employees, or the city on what has been termed the most dangerous construction site in the U.S.

Only one small policy with $75 million limits covers the potential losses, despite the efforts of the world’s two biggest insurance brokers MarshMac and Aon, both of whom lost hundreds of employees in the attacks on the WTC, to obtain broader coverage.

After four months the development of a number of health conditions thought to be related to the smoke and dust from the site, has caused he” contractors to recognize their jeopardy. They’ve asked Congress to provide some insurance protection. They’re concerned that, unless some action is taken, they may face bankruptcy, if a significant number of lawsuits are filed.

Insurers sited the unknown nature of the risks involved and the inability to accurately measure their potential exposure as reasons for denying coverage. However that doesn’t change the fact that the companies are exposed to lawsuits from neighboring properties for disturbing building foundations and to the general population for the potential effects of the dust, which contains asbestos and other harmful chemicals. While their employees have workers compensation coverage and health insurance, long tail liabilities from products like asbestos wouldn’t in all cases be adequately covered.

The Times quoted experts as saying that a project this size should normally have at least $2 billion in coverage. MarshMac, Aon and Willis have been asked by the city to try and find that coverage, but so far they’ve only come up with offers for policies covering a two to three year period, which wouldn’t cover the long term liabilities, which could take 10 or 20 years to develop.