3 Imperative Things to Remember When Reviewing Active Shooter Insurance
It’s a tough subject to tackle, but mass shootings in the United States have become more commonplace.
As violence crops up in schools, movie theaters, workplaces, universities, churches, concert venues, government buildings and more, risk managers know they have to do something to preempt an attack.
Some suggest arming teachers in schools or arming managers in office spaces, but each strategy brings its own set of risks and liability. A Gallagher paper, “Arming Managers With Guns?” detailed such risks, including compliance with specific gun permitting laws and issues surrounding reckless or negligent behavior related to the corporate-approved weapon.
And while no policy can be the ‘one-size-fits-all’ solution for mass shootings, a number of entities are starting to invest in active shooter insurance to cover losses that stem from such an event.
In fact, after the Marjory Stoneman Douglass High School shooting on Valentine’s Day, McGowan Program Administrators, which offers active shooter and workplace violence covers, noted hundreds of new inquiries into this type of coverage from schools. The Beazley Group saw a four-fold increase in interest in active shooter policies since last year, marking Marjory Stoneman as the catalyst.
As risk managers aim to research and add this type of cover to their portfolio, here are some key factors to keep in mind while planning out potential active shooter insurance coverage.
1) Don’t Assume General Liability Policies Will Cover Everything
As McGowan notes on its website, many of the standard liability policies in existence were most likely written before the rate of mass shootings surged. Some even go as far as to exclude gun-related violence entirely.
Because of this, active shooter insurance has grown in popularity. Also known as active-assailant coverage, active shooter insurance is considered a gap coverage meant to cover such things as funeral costs, death benefits and other expenses of that nature. Some policies include extra liability and medical expense benefits. Others cover a wide range of attack-types, such as knife and vehicular attacks, as part of the cover.
School districts in particular are interested in adding this to their existing covers.
“It at least gives us some peace of mind that, in the event of a horrible tragedy, we can begin to put things in place,” Belpre City Schools treasurer Lance Erlwein told the Wall Street Journal.
“Fifteen years ago who would have ever thought you would need something like this. It’s awful that schools have become the target,” Erlwein added.
However, it’s important to remember that not all active shooter policies are the same from carrier to carrier. Evaluating and comparing coverages is key throughout the process in addition to reviewing general liability for where the gaps might be in the first place.
2) Likewise, Don’t Rely Entirely on Existing Property Coverage if the Building Has to Come Down
“A property policy offers very little in coverage for an active shooter event,” said Mitchel Brashier, national risk control leader, the Baton Rouge area, Gallagher.
Sometimes, even though the physical damages are small, places of violence choose to tear down the affected building. Marjory Stoneman Douglass, for instance, has shuttered its facility and plans to demolish it.
The average property policy doesn’t have this kind of teardown/rebuild clause attached to it. Likewise, “there are so many variables to consider concerning insurance for replacement of physical plants where shootings have occurred that it would be difficult for the industry to design a ‘one-size-fits-all’ approach,” Brashier added.
Take Sandy Hook Elementary and Virginia Tech as examples:
In 2012, a gunman entered Sandy Hook, killing 20 school-age children and six faculty members. The school was completely torn down and rebuilt due to the emotional duress linked to the site. The school spent roughly $50 million to take down and rebuild a facility better designed for possible future attacks.
By comparison, in 2007, a college student unleashed violence at Virginia Tech, killing 32 and wounding 17 more. The university chose to tear out the inside of the buildings where the shooting occurred and, instead, strategically remodeled the insides to better protect students against a repeat attack.
“Usually, there is very little resulting physical damage to trigger the property policy; however, due to obvious emotional reasons, going back into the same facility may not be practical, at least for some time,” said Brashier.
Risk managers can take a page out of Dianne Howard’s book. As director of benefits and risk management for Palm Beach County School District, she knew she wanted to prepare for the unlikely possibility she would need to take down one of her school buildings. She worked to get a teardown/rebuild clause and upped her active shooter coverage.
3) Ask About Terrorism Coverages and Other Potential Exclusions
Many active shooter insurance policies exclude terrorism as part of their coverage.
This is because of how the two types of events are defined. While both horrendous in nature, these events are looked at differently in how they are addressed by first responders, the law and insurance. For example, after the Mandalay Bay Las Vegas shooting in October 2017, the authorities spent weeks debating whether or not to define the attack as that of a terrorist nature. Gunman Stephen Paddock was able to squirrel away 47 guns into his hotel room before unleashing 1,100 rounds on hundreds of concert-goers below. Fifty-nine people died and 422 others were injured.
Ultimately, however, authorities settled on calling the event a mass shooting, because Paddock’s motive — which is still unclear — did not fall into the definition of a terrorist attack.
Because of this, an incident could easily go from being a random and senseless act of gun violence and become labeled an act of terrorism. Risk managers are wise to ask about any possible terrorism exclusions within their active shooter insurance, especially if they want to guarantee they are prepared for these unpredictable events. &