Rethinking the risk: September 11 brings insurance needs to the forefront.

• Author: Kronemyer, Bob
• Position: Insurance - Brief Article

The September 11 terrorist attacks should have been a wake-up call for businesses to reevaluate their insurance coverage. Firms may be in for a similar rude awakening with steep premium increases in some instances.

"Businesses are certainly reevaluating their coverage. They are particularly considering expanding coverage in the unlikely case they are directly affected by a future terrorist attack" says Marty Wood of the Insurance Institute of Indiana in Indianapolis. In fact, one member of the not-for-profit trade association was housed in the World Trade Center.

"People should have had business interruption insurance even before September 11," Wood stresses. "There are companies that were situated in the World Trade Center that are currently doing business because they had business-interruption insurance." Key-employee life insurance is also prudent because it pays a death benefit to the company upon the death of an important employee.

Besides contemplating additional coverage, companies are worried about a rate increase. "The insurance market was already hardening before September 11, so most people were prepared for some type of increases anyway," Wood says. "The terrorist attacks just assured that. You've got to be prepared for worst-case scenarios because insurance is asset protection."

Smaller businesses are more likely to be affected by a disaster versus a larger company with several locations. "Typically, smaller businesses can't deal as effectively with a catastrophic event," Wood says.

According to Nick Rutigliano, president of Tobias Insurance Group in Indianapolis, "the need to insure various aspects of your business has not changed simply because of September 11. But what certainly is going to change is the cost."

In a soft...