Recent acts of violence in the United States have underscored persistent challenges in how domestic terrorism is defined and insured. As businesses face mounting risks and legal uncertainties, industry leaders are examining the evolving landscape of coverage and liability.
Chris Kirby, president of Starwind Specialty’s political violence & terrorism (PVT) program, is closely watching the evolving risks facing US businesses as incidents of violence with ideological motivations continue to make headlines.
“While these events meet the criteria for domestic terrorism, the US federal government currently lacks a criminal statute to formally charge individuals with domestic terrorism,” Kirby said.
Kirby pointed to the 1995 Oklahoma City bombing as a foundational example of the legal ambiguity surrounding domestic terrorism in the United States. “Despite the scale of the attack, McVeigh was not charged with terrorism but with criminal offenses, including the use of a weapon of mass destruction and multiple counts of murder,” Kirby said.
He noted that the threat has not diminished since then. “Although that event occurred nearly 30 years ago, the threat has only intensified. Between 2001 and 2021, more than 540 domestic terrorism incidents were reported in the US, with federal investigations into such activity increasing by 357% over the past decade,” Kirby said.
The insurance sector is starting to feel the strain. The main issue troubling casualty insurers is the surge in nuclear verdicts tied to Assault & Battery (A&B) claims. Businesses ranging from apartment buildings and bars to hospitals and retail outlets have been held responsible when customers, workers, or even bystanders suffer harm during violent incidents.
“Even more troubling, in some cases, family members of perpetrators have received multimillion-dollar awards,” Kirby said.
This environment has led to a shift in coverage practices. “Many insurers have responded by excluding A&B from General Liability (GL) coverage altogether. In response, lenders are increasingly mandating that GL policies include A&B coverage without sublimits, further complicating placement for insureds,” Kirby said.
Kirby noted that some companies are looking to the Terrorism Risk Insurance Act (TRIA) as a potential safeguard. To address coverage gaps, certain policyholders have opted for TRIA endorsements, though the cost has climbed sharply, in some cases equaling the entire general liability premium.
“TRIA also requires the federal government to certify an event, a process that adds uncertainty and rarely includes domestic incidents,” he said.
He also addressed the growing exposure for businesses facing organized opposition. “Many businesses today face organized opposition, whether ideological, political, or religious. While free speech is constitutionally protected, escalation to violence often results in litigation, particularly when US citizens are involved. The legal system views such actions as crimes, not terrorism, exposing companies to liability without the shield of TRIA or GL coverage,” Kirby said.
Kirby highlighted the benefits of private-market terrorism insurance. Unlike TRIA, these policies do not separate international from domestic terrorist acts, nor do they rely on government certification to trigger coverage.
“This ensures coverage is triggered promptly and GL coverage is preserved, providing a vital safety net in uncertain times,” he said.
Reflecting on the broader implications, Kirby said, “Historically, terror attacks on US soil prompted national outrage and swift responses. But in today’s polarized climate, where corporate actions are under constant scrutiny and negligence theories are expanding, the same legal strategies used in A&B litigation may soon apply to domestic terrorism-related claims.”
Kirby also cautioned businesses depending only on standard coverage, stressing that in the current climate, relying exclusively on a traditional general liability policy has become increasingly risky.
A private market terrorism policy offers "clearer protection, streamlined response, and greater peace of mind for insureds navigating a volatile world,” he said.
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