Business Insurance Quotes

Get free business insurance quotes

Currently insured?:
Yes No
Zip Code:

Dealing with the disaster in New York: How insurers are responding

In the wake of the terrorist attacks against the World Trade Center in New York City and the Pentagon in Washington, D.C., insurers are shaking off their shock and swinging into action to respond to the tragedy.

"When our adjusters can get past the devastation and human cost of these events, they will approach it as they would any other tragedy."

Many insurance companies, including The Chubb Corporation, The Hartford, Kemper Insurance Co., and State Farm Mutual Auto Insurance Co., are responding to the terrorist attacks in the same way they would to a natural disaster: alerting and activating their catastrophe teams. Read It's ground zero for catastrophe teams handling claims from terrorist attacks.

"When our adjusters can get past the devastation and human cost of these events, they will approach it as they would any other tragedy," says Marnie Goodman, a spokesperson for The Hartford.

According to Goodman, The Hartford has a team of 70 adjusters working out of Shelton, Conn. — approximately 75 miles from New York City — who will work with insurance customers to help reconstruct an accurate picture of what was lost.

In the areas outside of the World Trade Center itself, says Goodman, the adjusters will work with customers on a case-by-case basis to process property, auto, and business interruption insurance claims.

And those claims will be considerable. There were 288 companies based in the north and south towers of the World Trade Center, and on Oct. 2, 2001, insurance rating agency A.M. Best Co. reported that it expects losses of $30 billion and that that number may rise.

Donald Way, president of the Insurance Brokers and Agents of the West (IBA West), says claims from the attacks will rival those from Hurricane Andrew in 1993 in Florida and the 1994 Northridge earthquake in California.

The Chubb Corporation, one of the first insurers to speculate on the financial impact of the terrorist attacks, says that it believes it has "significant" property exposure in and near the World Trade Center, both in terms of the structures of the twin towers and for businesses located there and in nearby buildings, that could result in losses for the insurer of up to $200 million.

Chubb also says it will pay business interruption, accident, and workers compensation claims from businesses located in and around the World Trade Center, but that it is too early to estimate the cost from those claims.

How do you adjust for a claim when there's nothing left?

Kip Diggs, a spokesperson for State Farm, says that his company has stressed to its customers the importance of keeping backup copies of inventories, software, business tools, and other important records.

"In catastrophes that totally destroy a home or a business you hope for backup files of inventories, secured off the premises," says Diggs. "Basically you hope for something to help get people's businesses and lives back together."

"In catastrophes that totally destroy a home or a business you hope for backup files of inventories, secured off the premises," says Diggs. "Basically you hope for something to help get people's businesses and lives back together."

Even if a business doesn't have backup records, there likely won't be an argument from insurance adjusters, says Way. According to Way, the insurance industry has a history of paying the full policy limits to victims of disasters of this magnitude.

"The reputation of the insurance industry is that it is at its best in situations like this," says Way. "I think you'll see a lot of insurance companies paying the policy limits without a lot of hassle."

Even if insurers do pay the full policy limits, it may still not be enough, says Way. In most cases, businesses don't carry insurance policies to cover the total value of their equipment, assuming it's unlikely that they'll have a total loss.

"I guess that we saw the limitations of that theory on Tuesday," says Way.

Chubb says that its catastrophe unit is in contact with the New York Insurance Superintendent, awaiting permission to enter the area around the World Trade Center, though a spokesperson said that the physical inspections would almost certainly be limited to the other buildings around the complex.

State Farm currently has its catastrophe team on alert, in a "holding pattern" and ready to head to New York City as soon as they get the go-ahead from city and federal officials. When that clearance comes, the State Farm adjusters will drive mobile claims vehicles to the city.

Arriving on the scene in company vehicles will ensure that the adjusters have all the equipment they need to immediately start processing claims, says Diggs, without having to worry about interruptions in commercial airline service or the number of bags they can take with them.

Ready to get a quote?

Get free business insurance quotes

Insure.com Redesign Survey