As Massachusetts and the nation marked the 13th anniversary of the September 11 terrorist attacks on the World Trade Center and Pentagon, attention also turned to lingering fallout from a terrorist strike locally – the Patriots Day 2013 bombings at the Boston Marathon.
In particular, many business owners have expressed frustration that while Boston and the world clearly experienced the bombings that killed three people and maimed dozens more as a terrorist attack, the man in charge of deciding for insurance payout purposes what is terrorism hasn’t agreed.
Aides to Treasury Secretary Jacob Lew said Thursday that "the secretary has not determined that there has been an 'act of terrorism' under the Terrorism Risk Insurance Act" that was enacted after the 9-11 attacks.
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Thursday, that statement got widely interpreted in media reports as stating that Lew had determined that the 2013 bombings were officially and conclusively not an act of terrorism.
But insurance expert Jon Cowen of Posternak, Blankstein & Lund LLP said that interpretation appears to be off the mark. "I don’t believe there has been an official declaration by the secretary of the treasury pursuant to the Terrorism Risk Insurance Act that the Marathon bombing does not constitute an act of terrorism. It's not clear to me that the secretary has made a final decision," Cowen said. "At this point. it could be a statement simply that at this point, we have not made a determination that it constituted an act of terrorism."
That’s not sitting right with business owners like Perry Geyer of Newbury Street recording studio Cybersound, who lost a week of business after the bombings and remains frustrated Hanover Insurance summarily rejected his claim for $6,000 in compensation for lost profits while the streets around him were shut down by police and national security and law enforcement.
"What is an act of terrorism? If that's not an act of terrorism, I don't know what it is," Geyer said. "Economically, the city was definitely crippled. I mean, one week of just nothing. I don't know anybody who was doing business that week."
The owners of the Sir Speedy print shop on Bolyston Street, a block from one of the bombing sites, have sued their insurance company, Magna Carta Companies/Public Service Mutual Insurance, in federal court in Boston for refusing to pay them for lost business during the days the store was shut down and afterwards, citing the terrorism coverage issue. The insurance company rejects all Sir Speedy’s claims.
Geyer wound up cancelling the provision in his business insurance at Cybersound that would cover terrorist actions. "I had terrorism insurance since 9-11, and I thought I was covered, and so now I cancelled it. Because what good is having terrorism insurance if you don't get paid?"
Cowen, however, said it gets confusing: You don’t really buy something called “terrorism insurance” under the post 9-11 law meant to get businesses coverage for losses stemming from insurance. Rather, you pay for coverage to make sure an act of terrorism doesn’t void your insurance – much like you might add a "civil authority" rider to protect yourself if the police or fire departments order your building closed or “business interruption” coverage for scenarios where you don’t necessarily sustain property damage but can’t open for business. Many policies normally exclude payouts to policyholders for terrorism or so-called Acts of God or other extraordinary events beyond the control or foreseeable expectations of the policyholder or insurer.
"I think there might be a misperception because the fact that a business might have affirmative terrorism insurance is probably not going to get them additional coverage," Cowen said. "All it will mean is that an insurance carrier is not going to be able to come back and say you're not covered because it's an act of terrorism."
One reason Lew or a future treasury secretary may never declare the Marathon bombings an act of terrorism: For all the death and injury they caused, so far they’ve only been estimated to have generated $1.9 million worth of property damage, well below the $5 million threshold under the TRIA for a terrorist act declaration. And it may the question goes unresolved indefinitely, and businesses along Boylston Street in the Back Bay affected by the bombings remain out of luck in their hopes for compensation from their insurers.
With videographer Sean G. Colahan