While it is an aspect of insurance coverage that many companies would rather not think about, protecting your business from financial loss due to terrorism is essential.
"There are many terrorist organizations active within Canada's borders," according to the Canadian Security Intelligence Service. "Their presence can be attributed to Canada's proximity to the United States, one of the world's pre-eminent terrorist targets, but also to the fact that Canada is an attractive place to live and do business because of its openness, and its respect for human rights and freedoms."
Canada's vulnerability to terrorism became all too clear recently when the RCMP arrested two people accused of plotting to derail a passenger train running on a Via Rail track.
While news of terrorist plots rightfully make people worry about danger to human life, it is also important for businesses to understand the financial risks. Recent events south of the border have illustrated this risk, as many businesses were forced to close down in the wake of the Boston Marathon bombings. What's more, these businesses may find that the insurance coverage they were counting on will not be available.
"Hundreds of businesses forced to close their doors during the continuing investigation into the Boston Marathon bombings could be denied insurance coverage for lost sales because of terrorism exclusions built into many policies," writes Callum Borchers for The Boston Globe. "The exemptions... would allow insurers to reject so-called business interruption claims made by some of the more than 400 companies that have been shuttered since a pair of bomb blasts killed three and wounded 282 others in Boston."
While most Canadian businesses are protected from physical damage and business interruption due to instances of fire, lightning, wind storms, explosions, riots and vandalism, financial loss due to terrorism may not be covered. This gap in protection could leave your company financially vulnerable to terrorist acts resulting in property damage, business interruption or loss of customers.
Be proactive with protection
The first step for any business is determining its risk and financial exposure. Obviously, if your business is located in a large city, you have more risk than in rural regions. In addition to a company's physical premises, you should also take into consideration supply chain and potential liability. Additionally, if you do business overseas you should determine how vulnerable you are to terrorist attacks in those locations. Different countries have different risks when it comes to terrorist activity. Once your business has analyzed its vulnerability, you can make informed decisions on how to protect it.
The next step should be obtaining the proper insurance coverage. Inspect your policies to see if your business is covered for acts of terrorism. If not, investing in a terrorism insurance policy might be the wisest course of action. Your insurance company may be able to assist you with risk management strategies. By understanding the potential impact of terrorism on your businesses, you can begin the process of protecting yourself.
Contact your HUB broker today for more information.