The Difference Between Insurance Policies Involving Workplace Violence and Terrorism

Unfortunately, these threats and other acts of mass violence is ever-present. Whether impacted directly or indirectly, when these acts do occur they can have a significant impact on a company’s property, employees and its ability to trade.

Insurance can play a role in mitigating the fallout from these malicious events. The common policies available for businesses are active shooter/ active assailant/workplace violence and terrorism insurance.
Due to similarities we can typically group active shooter/active assailant/workplace violence policies into one group and terrorism into the other.

Let’s look at the difference between these coverages:

What is the purpose of each type of policy?

Standalone terrorism & sabotage policies have been common since the 9/11 terrorist attacks. Their primary purpose is to protect a company’s assets and income in the event their business is the target of – or impacted by – an act of terrorism.

While similar in some respects, active shooter/active assailant insurance has emerged in recent years to offer coverage for malicious incidents not designated as acts of terror, with a focus on incident response costs, victim coverages, business interruption and potential legal liabilities. Workplace Violence can be added to this group as well.

How do you define an act of terrorism, sabotage or active assailant attack?

In short, an act of terrorism or sabotage is a violent or subversive act committed for political, religious, ideological or similar purposes.

Alternatively, an active assailant event is considered to be any physical attack with the intention of killing or causing bodily harm, including attacks using any handheld weapon, explosive device, acid or vehicle. Active shooter/deadly weapon/active assailant/workplace violence events aren’t restricted to political, religious, or ideological events.

What are the differences in coverage?

The difference in cover between a terrorism & sabotage insurance policy and an active assailant insurance policy largely comes down to the likely impact of each type of event.

For instance, a traditional terrorism & sabotage insurance policy will focus primarily on property damage and business interruption cover. The assumption is that an act of terror will most likely cause damage to a business’ assets or property or impact their ability to trade for a sustained period of time. It has a narrower scope
of what events will trigger the policy, but it allows for deeper protection of the insured’s assets and income which reflects the greater loss from physical damage that can occur in a traditional terrorism event. A good policy will offer sub limited cover for the restriction of access to premises, as well as contingent business interruption and utilities cover to help protect the business if its trading partners or key services are impacted by an attack.

In the case of an active assailant/workplace violence/active shooter event however, the cover is designed to respond to a much broader definition of events but offers more limited cover for property damage and business interruption. Instead, workplace violence/active assailant insurance products assume the primary impact of an attack will be to the victims, customers and employees, and is designed to provide cover for victim and organization support costs and crisis management costs, as well as the insured’s legal liabilities. Loss of attraction can also be included within the provided business interruption cover to help the insured recover from any prolonged impact to revenue.

*The views and opinions expressed in the Public Risk Management Association (PRIMA) blogs are those of each respective author. The views and opinions do not necessarily reflect the official policy or position of PRIMA.*