Mass acts of violence—active assailant or active shooter events—can happen anywhere. If an active assailant event impacts one of your commercial insureds, they may need tailored coverage designed to respond to the aftermath. Active assailant coverage, also called active shooter coverage, can offer some of that assurance.

Active assailant insurance coverage was used to protect large school districts in the post-Columbine school shooting era, according to Paul Marshall, managing director of the McGowan Companies, which specializes in active assailant coverage.

The U.S. Department of Homeland Security defines a mass casualty event as “an individual actively engaged in killing or attempting to kill people in a confined and populated area, typically through the use of firearms." These events can happen anywhere people gather—sports arenas, shopping malls, medical facilities, houses of worship, or bars and taverns.

These threats do not arise solely from guns, but can occur from vehicles, knives or incendiary devices. Additionally, workplace violence events, defined as acts or threats of physical violence, harassment, or intimidation, may trigger coverage under some active assailant policies.

It is important to evaluate the policy forms from various insurers to understand the definitions and exclusions in each policy.

What Coverage Does Your Client Need?

An experienced risk manager for a major university system elected not to purchase active assailant coverage because “our general liability carrier will respond." Unfortunately, the general liability policy may have exclusions, such as a terrorism exclusion, that may apply and will not provide the unique coverages offered by an active assailant policy.

If a mass casualty event occurs, door breaches, shrapnel damage and explosions may cause extensive damage. A commercial property special form may cover these damages, but not to the extent the business may require. Additionally, it will not provide the upgrades that may be critical to improve security post-event—panic buttons, bulletproof glass and metal detectors. Some active assailant policies provide these types of upgrades, as well as extensive public relations support post-incident.

Insurers designed the general liability policy to respond to negligence allegations. Something as simple as leaving a door unlocked that allowed the perpetrator to enter the building may be enough to trigger coverage under such a policy. However, the active assailant coverage acts more like a “GoFundMe account," according to Marshall.

Benefits begin immediately post-covered event without waiting for a liability determination. To cover the costs that arise, such as post-incident victim counseling, which may be required for years, and cleanup—an active assailant policy is the best product to respond, Marshall believes.

Importantly, general liability typically excludes employee injury, damage to property, business interruption and terrorism and offers no crisis management component, Marshall says. This can leave employers facing substantial out-of-pocket costs and force injured employees to rely solely on workers compensation benefits.

But while one state may make an active assailant event-related injury compensable under the workers comp policy, other states may find no nexus to employment and the insurer may deny the claim. Between 2011-2015, more than 300 assailant homicides were committed by a co-worker or associate, according to the Department of Labor Occupational Health and Safety Administration. In those cases, workers comp coverage would not normally apply.

Traditional policies may leave commercial insured's with substantial coverage gaps if they experience an active assailant event. The active assailant policy can cover business interruption and provide much-needed risk management services to help business owners recover if they do experience this type of event.

Be aware of these coverage limitations to watch for under the active assailant policy forms:

• Employee exclusions
  
• Terrorism exclusions
• Casualties threshold limit
• Vehicle exclusions
• Drone exclusions
• Requirement that any explosive device be physically attached to the assailant
• Mental anguish exclusions
• Per crisis response or victim sublimits

The insuring agreement, definitions and exclusions will vary by policy. Because these specialty policies historically evolved from terrorism and kidnap and ransom policies, the policy forms broadened to meet the needs of insureds as these events continued to unfold.

Is Active Assailant Coverage Accessible and Affordable?

Many smaller businesses buy coverage limits of $1 million or $3 million, according to Marshall. Larger businesses can buy limits up to $100 million from some carriers.

Insurers base the quotes on the following factors:

• Number of employees
• Number of annual guests or patients who visit retail establishments, businesses, or schools
• Number of locations and hours of operation
• Years in business
• Employment protocols such as background checks, or employee assistance programs
• Prior violent event history

Underwriters review crime maps and consider other factors before rating. For example, they take into account the increased risk in a business such as a cannabis storefront that only takes cash. Any establishments serving alcohol and habitational risks may face higher premiums, as well as hospital systems or other organizations offering late night service.

Applications are usually three pages or less, and in some instances, carriers offer online quotes for smaller organizations. Premiums are affordable, according to Marshall, with minimum premiums running between $1,850 and $2,500 with a zero to $10,000 retention in most cases.

Should an Agent Routinely Offer Active Assailant Coverage?

As active shooter events incidents continue to occur throughout the U.S., it is entirely possible that a failure to offer this coverage could result in an errors and omissions (E&O) claim. Post event, if the general liability or property insurer limits or denies coverage and your insured discovers that another policy could have covered the event more effectively, an agent could face an E&O claim.

Today, almost any business can face an active assailant threat. If you are familiar with the active assailant policy forms, you can move confidently—but if you are unsure, talk to an underwriter who offers the product to learn more before you commit to recommending this highly specialized coverage.

As mass violence incidents threaten our nation and insurance responds, coverage will evolve. Expect both a narrowing and an expanding of coverage as insurers develop new ways to manage the aftermath of these events and as new threats emerge.

Nancy Germond is Big “I" executive director of risk management and education.