Firms insure against terror
Convention spurs extra coverage
Fears of a terrorist attack have led Boston's convention host committee and nine downtown businesses, office buildings, and hotels to purchase special insurance coverage to cover the FleetCenter and the businesses for losses from terrorism.
Boston 2004, the host committee for this month's event, paid $86,000 on its insurance premium to add coverage for any act of terrorism by a foreign government or a known foreign group, according to its president, David Passafaro. The terrorism coverage is part of a general liability policy that also provides $100 million in coverage for casualty, automobile, theft, property damage, and officers and directors.
Separately, at least nine businesses near the FleetCenter have purchased special terrorism insurance.
"It was an easy sell," said Mike Chapman, chief of sales for Hub International New England of Wilmington, who noted that comments by Mayor Thomas M. Menino, other political leaders, and the Secret Service over security issues and terrorism prompted an unprecedented number of the firm's private clients to add terrorism coverage to their policies.
The terrorism insurance is yet another sign of the extraordinary preparations being undertaken to stage the first political convention since the Sept. 11, 2001, terrorist attacks. Under instructions by the Secret Service, local officials plan to close miles of Interstate 93 during rush hour and shut North Station for commuter rail service. Security issues have driven convention costs to nearly double the original $49 million price tag, to $95 million.
Passafaro said the insurance costs to Boston 2004 are lower than expected. He said that the general liability policy, slated to cost $3.9 million, has come in at about $2.4 million.
"Clearly when we did the contract, terrorism was on everyone's mind," Passafaro said. "We thought it was going to be difficult and confusing. In fact it has turned out to be fairly straightforward for us."
He said that the committee also paid another $145,000 to insure against liabilities incurred if the city or the Democratic National Convention is forced to cancel the event. Among the potential reasons to cancel would be a terrorist attack here or somewhere in the country before the convention that was serious enough to prevent people from attending.
While convention organizers were looking for terrorism coverage, owners of highly valued hotels, businesses, and office buildings that are near the FleetCenter, the site of the convention, also added terrorism to their liability coverage. Chapman said that because of confidentiality issues, he can't reveal the names of his clients. But he said they are hotels, high-profile office buildings, and businesses, all with property that exceeds $25 million in value.
With the nine FleetCenter area businesses now carrying terrorism coverage, Chapman said that 17 of his firm's 25 customers have signed up for the terrorism insurance. He said that, for a property valued at $25 million, an average premium would add about $3,000 to the general cost of the policy. 