Hiscox Covers Threat-Induced Business Interruption

PRODUCT: Threat of a Malicious Act coverage

COMPANY: Hiscox USA

BEST RATING: A (Excellent)

AVAILABILITY: Coverage is available through wholesale and retail brokers appointed with Hiscox.

FOCUS: Consider the following scenario: Authorities receive notification of a bomb threat targeting a local mall. They evacuate shoppers and close mall entrances for five hours while they investigate. Ultimately, they determine the threat is a hoax and allow shoppers to return. But the stores inside the mall suffered from a significant loss in sales during the five-hour crisis.

This is a perfect example of the type of risk covered by Hiscox’s Threat of a Malicious Act insurance. The new product protects businesses from the costly disruptions and lost sales revenues that can result from a threat.

“Ensuring the safety of staff and clients can result in costly disruptions to business continuity and lost income,” explains Jennifer Rubin, global practice group head for war, terrorism and political violence at Hiscox. “We protect businesses against negative economic results when responding to malicious threats—even if no physical damage occurs.”

Hiscox’s coverage responds to the dramatic rise in terrorism over the last 15 years. Not only have deaths from terrorism increased, but in 2014, the global economic cost of terrorism reached an all-time high of $52.9 billion—marking an increase of 61% from 2013, according to the Institute for Economics and Peace.

“Today’s organizations are concerned about the threat of terrorism and its effects on employees, customers and shareholders,” Rubin says. “Our policy can mitigate the impact of the threat of a terrorist event and enable a company to recover from an interruption in conjunction with its business continuity plan.”

UNDERWRITING: The portfolio includes coverage for property damage due to malicious acts. Coverage options include indemnity against lost revenue for the length of time the business is interrupted, up to a maximum of 10 days; up to $5 million per occurrence and $20 million in the annual aggregate; and a post-loss assessment from security specialists to help prevent a re-occurrence.

Hiscox policyholders also gain access to risk advisory services before and after incidents. Control Risks, a global risk consultancy and Hiscox partner company, offers clients specialized advice on how to prepare, prevent and mitigate malicious acts through direct consultation and a 24/7 helpline.

Hiscox can tailor coverage to each client’s requirements. This includes terrorism insurance for property damage and business interruption, including extra expense costs and loss of rental income; terrorism general liability and/or employers liability; terrorism lenders’ interests; full building values or coverage on a first-loss basis; war and political violence coverage; and coverage for riots, strikes and civil commotion.

The Threat of a Malicious Act policy is activated if a malicious threat occurs and one or more premises are evacuated; staff or the public are prevented from leaving the premises; or order of a civil or military authority prevents access to the premises.

MINIMUM PREMIUM: $1,000.

TARGET: The policy is designed for organizations ranging from small businesses with less than $1 million in revenue to multinational Fortune 500 companies. “Our products serve a wide range of businesses in need of the certainty that comes with insurance coverage for attacks and threats,” Rubin says.

COVERAGE TERRITORY: All 50 U.S. states.

CONTACT: Jennifer Rubin, USA product head, war, terrorism and political violence; Hiscox, 520 Madison Avenue, 32^nd Floor, New York, NY 10022; 646-442-8304.

Ronimarie Acord is an IA contributor.