WASHINGTON – Before Sept. 11, few people even gave a thought to terrorism insurance but since then 45 states, including Maryland, have approved regulations that let property and casualty insurers drop terrorism coverage from policies.
That has posed a problem for many businesses looking for terrorism coverage. Even when terrorism coverage is offered, it is often prohibitively expensive, analysts said.
But the Maryland Transportation Authority was able to lock in a three-year policy before the Sept. 11 attacks forced the issue of terrorist coverage to the fore.
The policy includes terrorism insurance on the authority’s 10 bridges and two tunnels, which include the Harbor and Fort McHenry tunnels and the Chesapeake Bay, Francis Scott Key and Gov. Harry Nice bridges, among others.
“We lucked out,” said Tom Kelley, director of insurance in the Maryland’s Treasurer’s Office.
“You can’t find anybody who will write a three-year policy now,” Kelley said, citing the fact that “since Sept. 11 insurance rates have gotten astronomical.”
The policy issued by Indemnity Insurance Co. of North America began Dec. 1, 2000, and ends Dec. 1, 2003, said Lori Vidil, an authority spokeswoman. The annual premium is $704,741 for more than $2.5 billion in coverage, Vidil said.
By comparison, officials at San Francisco’s Golden Gate Bridge had a tougher time of it when they went looking for insurance after Sept. 11.
Before this month, the bridge district had a three-year policy that cost about $500,000 per year for $125 million in coverage — $100 million for physical damage and $25 million for use and occupancy, said Mary Currie, a Golden Gate Bridge spokeswoman.
In its current one-year contract, the bridge district is being forced to pay an annual premium of $1.1 million for just $25 million in physical damage. Terrorist attacks are excluded from that policy, Currie said.
She said district officials opted for a one-year policy in hopes that prices will come down by the time they have to renegotiate.
But though Maryland was able to lock in terrorism coverage in its policy for transportation authority facilities, it is encountering difficulty obtaining excess property insurance on other state properties, Kelley said. The state can cover up to $2.5 million on a property and is looking to bolster that through private insurance policies, he said.