A ‘Built-in GoFundMe’

To do that, a growing number of restaurants, small businesses, houses of worship, government agencies, and school systems are seeking out active shooter insurance policies that cover the costs associated with the tragic events.

“Everyone is realizing that, you know what, we need to have a built-in GoFundMe account,” said Paul Marshall, active shooter/workplace violence insurance program director at McGowan Program Administrators.

Insurance coverage for active shooter events has been around since 2011, and the standalone policies aim to supplement the general liability policies that different institutions take out.

“The general liability policies that these entities purchase, they didn’t really address mass shooter-type attacks,” said Grey Lester, assistant vice president of Richmond, Virginia-based Professional Governmental Underwriters Inc. “As these incidents arose, there was a need for affirmative coverage to address these types of events.”

“There’s a lot of expenses and costs that can come out of these events that weren’t addressed by general liability policies,” he added. “That’s where the demand first started, and it’s grown steadily since the products were introduced.”

A spike in requests for the policies is usually preceded by a mass shooting, including this month’s back-to-back rampages at a Walmart in El Paso, Texas, where 22 were killed, and in an entertainment district in Dayton, Ohio, where nine died.

Marshall said his company is currently quoting a chain of 450 IHOPs and a bank system with a location in a Walmart. After the 2018 shooting at the Capital Gazette in Annapolis, Maryland, where five were killed, six newspapers across the country bought policies. McGowan is also underwriting policies for Oktoberfests, marathon races, and LGBT pride parades.

Schools, he said, make up roughly 30% of McGowans’ policies.

“It’s designed to put money on the ground, help the people and victims heal, help the community heal,” he said.

Since 2016, when McGowan first began offering active shooter coverage, the firm has seen demand for the product balloon. In July alone, McGowan placed 115 policies, which is as many as it placed for all of 2016. Marshall expects the company will write more than 1,000 policies this year and predicts that number will grow to 2,000 in 2020.

“People just want to take care of the victims,” he said. “They’re asking themselves, ‘What would we do? What would my newspaper, nonprofit, what would we do if this were to happen?’”

As active shooter coverage has become more prevalent, the policies have evolved to cover more than just events that occur at the hands of someone with a firearm.

Southern Insurance Underwriters Inc., based in Alpharetta, Georgia, began offering the policies four years ago, and it was initially confined to events in which a firearm was involved. But in the intervening years, the policy has gradually expanded to be called “deadly weapons protection.”

“As these terrible events occur, it’s more than just guns,” Hugh Nelson, the company’s senior vice president, said. “It’s explosive devices, chemicals, knives. It’s vehicles, from the Nice [France] situation, and all of those things that are now included in the definition of what instrument would trigger coverage.”

Premiums for active shooter coverage start at roughly $1,000, but Marshall said that as the policies become more popular, the price has come down.

“A lot of bad stuff happens in the world, so we’re insuring quite a few different organizations,” he said. “And every time we get a phone call, whether it be a daycare or attorney’s firm or yoga studio, we think, really? And then we think to ourselves, really. Because everyone is vulnerable.”

In addition to the emotional trauma of mass shootings, the tragedies can lead to financial losses for the places where they occur. But the coverage is designed to help with the wide range of expenses that follow a shooting.

Policies cover physical damage, including expenses incurred from upgrading security or closing, relocating and tearing down a building, liability, loss of income, crisis management services, medical expenses, funeral expenses, and death benefits.

Loretta Worters, vice president of media relations at the Insurance Information Institute, noted that while the “physical damages from a shooting usually result in nominal damage, the emotional trauma is such that property owners choose to tear down the structure and rebuild.” After the 2012 shooting at Sandy Hook Elementary School in Newtown, Connecticut, for example, it cost $50 million to build a new school.

Companies, however, view the access to crisis management experts as a particularly attractive feature of the coverage.

“They need that in the event one of those events occurs, because it doesn’t matter how much you prepare for one of these catastrophes, when it comes time to execute your plan, the management is going to be totally spooked,” Nelson said. “It’s really just a calm head and voice that’s going to intervene here to help get control of the situation.”

Not many businesses, he added, “realize what the fallout could be if it’s not handled correctly.”

While active shooter coverage is growing in popularity, agents and brokers still often find themselves educating different entities on the policy and why it is necessary.

“There’s exposures for all of these types of things, because unfortunately anyone can get a gun and pick a target,” Lester said.

But underwriters expect that eventually, it will be standard for businesses large and small, educational institutions, and local and state governments to have active shooter insurance.

Lester likened the predicted shift to cyber liability insurance, which protects businesses in the event of a data breach.

“It was a real slow burn on that, and now everyone has cyber liability,” he said. “I could see it going the same way.”