Terrorism Coverage

Home > Case studies > Terrorism Coverage

Terrorism Coverage

A large commercial real estate owner had been using the same lease language for decades, and had merely asked its real estate attorney to update the language as each lease came due. The attorney rightly updated the indemnification clauses, yet did not have the appropriate knowledge of insurance lingo to adequately update the insurance requirements. Following 9/11, when this landlord attempted to demand that its tenants provide proof that they carried appropriate Terrorism Coverage, the tenants relied on the antiquated language of their lease to state that there was no requirement that they provide terrorism coverage. The lease required “all risks property insurance at least as broad as Extended Coverage Endorsement #4″. This term went out of popular use in the early 1970’s yet the reference to it in the leases remained through the terrorism events of 2001.

ICA conducted research through its historical policy library and found that in the 1970’s, the War Exclusion did include exclusions for terrorism or sabotage. ICA went back to the intention of the policy drafters insuring All Risks Coverage to establish that terrorism should be covered as part of that coverage, as it was not specifically excluded, thus proving that per the terms of the lease, the tenants must provide terrorism insurance going forward at their own cost and expense. Since the losses of September 11 th were covered by those insuring buildings near Ground Zero, Thus, if a tenant had “All Risks” Coverage prior to 9/11, then they had terrorism insurance per the terms of its lease and must continue to maintain it. ICA also assisted the Client and its counsel in re-drafting the insurance language of the lease to add a clause that the tenants must maintain certain specific insurance types and limits as well as requiring that they “maintain any additional insurance as the Landlord deems reasonable” to prevent any such conflicts in the future.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.