B.Y.O.C. (Bring Your Own Coverage) By Robert Warne - October 31, 2001If you are passing through Los Angeles International Airport (LAX) or a number of other airports across the nation in the near future, make sure to pack your personal insurance policy. Since Sept. 11, many airport facilities have struggled to acquire, or maintain, a sufficient amount of insurance for liability protection against acts of war and terrorism.
Finding new coverage has been difficult and expensive. The going rate since Sept. 11 for a nine-month policy that protects airports financially from war and terrorism risk is running in the neighborhood of $1.8 million. This coverage has a $50 million cap and excludes baggage handling and security screening.
In contrast, prior to Sept. 11 LAX had coverage for up to $750 million in damages resulting from acts of war and terrorism as a rider to the airport’s basic insurance policy.
The financial bailout airlines received from Congress did not trickle down to airports. Airlines also struggled with acquiring insurance coverage following Sept. 11. Prompt federal legislation now protects airlines for six months and covers terrorism-related losses exceeding $100 millions. Airlines also enjoy the luxury of taxpayers picking up the tab to reimburse higher insurance costs.
Airport commissioners are urging U.S. Transportation Secretary Norman Mineta to extend similar federal assistance provided to airlines to other airline-related businesses. Catering, baggage handling, fueling and maintenance businesses have been hurting financially since Sept. 11.
As quoted in the Los Angeles Times, Joe Czyzyk, chief executive of Mercury Air Group told Mineta at the Airports Council International (ACI) conference in Kansas City, MO, Oct. 23, that airline-related businesses need comparable insurance coverage provided to the airlines, “Otherwise, the sky’s the limit on our liability.”
Also caught in the financial web of the Sept. 11 devastation are the insurance companies. Without some type of guarantee or federal backing, property/casualty insurers won’t renew policies that include acts of war and terrorism.
While many airports such as LAX and John Wayne International wait it out for Congress to step in, San Francisco International and Chicago’s O’Hare International have opted for higher premiums with reduced coverage in the interim.
|