A woman lights a candle at a makeshift memorial outside Walmart, near the scene of a mass shooting which left at least 20 people dead, on August 4, 2019 in El Paso, Texas.
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The threat of gun violence is real enough that business owners, schools and houses of worship can buy insurance against it.
Active shooter insurance, which is also known as active assailant coverage, has been around since 2011, according to the Insurance Information Institute.
It’s a policy that covers the cost of property damage and loss of business income, as well as medical expenses and funeral costs for victims.
This insurance supplements — but doesn’t replace — other coverage a business owner may already have, including general liability insurance.
“As violence grows in schools, malls, universities and other venues, insurers found that many of the standard liability policies in existence were written prior to the rise in mass shootings,” said Loretta Worters, vice president at the institute.
“Some [existing] liability policies even exclude gun-related violence entirely,” she said.
There were 250 active-shooter incidents designated by the Federal Bureau of Investigation from 2000 to 2017.
Last year ended with 27 incidents in 16 states, resulting in 213 deaths, excluding the shooters, the FBI found.
In July alone, McGowan Program Administrators sold about 120 active shooter insurance policies, according to Paul Marshall, managing director.
Back in 2016, it took the company the entire year to sell that much coverage, he said.
“It’s a sad state of affairs that this even has to be discussed,” said Robert Hunter, director of insurance at the Consumer Federation of America. “We shouldn’t be living in a country where this is a problem, but we do.”
How it works
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Active shooter coverage is a stand-alone policy, which makes it separate from the general liability insurance a business might otherwise carry.
“Many clients like these policies because they offer you crisis management services, medical expense coverage, job retraining and relocation and other supplements you might not have under your other policies,” said Tarique Nageer, terrorism placement advisory leader at Marsh.
Coverage limits and premiums vary, based on the venue, the location, the number of employees and visitors, and more.
“For example, universities can be hard to secure, and the high volume of people present daily increase the chance of an armed individual entering a facility unchallenged,” said Worters.
“Companies look for security in place: Are there armed guards?” she asked. “What is the distance to the nearest police and fire station? Does the organization have an emergency response plan?”
A small business, such as a coffee shop, might pay an annual premium of $1,200 for $1 million of coverage, Marshall said.
Meanwhile, a policy for a summer concert could run from $3,500 to $5,000 in annual premiums for $1 million of coverage, he said.
At the highest end, business owners can purchase up to $100 million in protection.
Exclusions and limitations
While active assailant insurance may fill in the gaps that aren’t covered by general liability policies, they may still have shortfalls.
For instance, biological weapons are a common exclusion, said Nageer.
There are also policies that won’t pay unless the incident leads to a specified number of casualties, while other contracts limit their payout based on the weapon used, said Marshall.
Since workers’ compensation may not cover employees’ post-traumatic stress disorder related to a violent event at work, active assailant policies can pay for that expense, he said.
Business owners ought to go through the policy language carefully before they commit to a purchase.
“With any new emerging insurance product, you really have to read the policy carefully and make sure it covers the thing that you’re worried about,” said Hunter.