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Monarch Fire Board Turns Down Insurance Coverage for 'Terrorism'

The move saved the district $2,783 on its annual property and liability premiums, which totaled $207,830 for 2013-14.

During a review of the fire district’s annual property and liability insurance policy, the Monarch Fire Board voted 2-0 in favor of declining paying a $2,783 annual premium for terrorism coverage.

The board made the decision after district attorney Charles Billings recommended against it, noting that in order for an incident to qualify, it would need to be of such a magnitude that it is declared a terrorist act by three different branches of government.

“Yes, there is a risk, but is it an appreciable risk for this district? I don’t believe it is,” he said. “It’s only $2,700, so it’s not going to break the bank, but this is one of those situations where the district is looking at every dollar spent.”

The premium represents a fraction of the total cost of coverage for the district, which came in at $207,830, $10,000 higher than last year. Peggy Roberts, a representative from district insurance broker Huntleigh McGehee, said the increase was due to a rise in property rates statewide due to claims from storm and wind losses, the addition of $1.7 million in total insured vehicle values (driven mainly by the purchase of a new ladder truck) and the inclusion of the terrorism policy.

“We as an organization are recommending terrorism on our public entity business,” Roberts said.

According to a packet presented to the board, the offer of terrorism coverage stems from the Terrorism Risk Insurance Act of 2002, which is a program designed to help the Department of the Treasury help the insurance industry share the risk of loss from any future terrorist attacks. In order for any attack to qualify, it must be certified as such by the Secretary of the Treasury, the Secretary of State and the Attorney General.

However, the government’s risk is limited to only $100 million for all claims nationwide in a single year. Board President Kim Evans said she agreed with Billing’s assessment that given the large scale required for an incident to be declared an act of terrorism under the law, it’s unlikely that there would be enough funding to cover any potential claims.

By turning down the coverage, the district is reduced its bill to $205,047. However, federal regulations will also require that the three board members sign an official document noting that they declined the insurance. As an annual premium, the board could choose to add the coverage next year.

Board member Steve Swyers was not present and participated in the meeting via teleconferencing, so he was not able to cast a vote. However, he indicated that if he were present, he would have voted against the including the policy.

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