The horrible terrorist attacks on the World Trade Center towers will be the most costly man-made catastrophe in U.S. history, according to the Insurance Information Institute. Insured losses are likely to be in the billions of dollars, but it will be some time before an accurate assessment of the total impact can be made, cautions the III.
Property insurance policies generally cover damage from fire, explosion, smoke, or other property or liability loss that occurs. Insurance policies do exclude war, but this is generally defined as a declared war between nations. In light of increased global terrorism, some commercial insurance policies may have exclusions for damage caused by terrorist attacks. Aviation policies will also be impacted.
The 1993 World Trade Center bombing caused $510 million in insured losses. The 1995 Oklahoma City bombing resulted in insured losses of $125 million. The Los Angeles riots of 1992 resulted in insured losses of $775 million, previously the most costly insured man-made disaster until today.
Any determination of insured losses will have to take into account the destruction of the World Trade Center towers; business and personal property of tenants and their employees; workers’ compensation for injured workers; claims for lost business income; and the cost of establishing alternative, temporary operations at off-site locations.
The U.S. government is self-insured, so physical loss to government buildings is not a commercial insurance issue. Insured commercial businesses within the Pentagon, for example, could incur insured losses.
The Insurance Information Institute is located in the vicinity of the World Trade Center and operations could be affected as this tragedy unfolds.
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