This Section is VERY Important
Read It Carefully 

SAFETY Act Insurance Requirements

The SAFETY Act is not a government supplied insurance or indemnification program. SAFETY Act specifically requires the applicant to maintain insurance that provides coverage for third party claims arising out of an act of terrorism whenever the approved products or services are deployed.

The insurance requirements under SAFETY Act are probably the most confusing, poorly worded, least addressed and the most disregarded issue when it comes to SAFETY Act.  The Department of Homeland Security, lawyers and insurance brokers are rarely, if ever, experts on both insurance and SAFETY Act.

Do not let the insurance section scare you.  The benefits of SAFETY Act by far outweigh the downside of the insurance “issues”.  They are certainly not insurmountable. However ...

YOU MUST KNOW WHERE THE INSURANCE PROBLEMS
LIE IN ORDER TO FIX THEM  -  THEY ARE THERE!

CRITICAL INSURANCE ISSUES:

• All SAFETY Act / Terrorism related liability policies must be carefully worded and dovetailed in order to protect your overall insurance program as well as the protections granted to you under the act.
• In addition to the limit of liability required, your SAFETY Act certification letter must specifically address all of the insurance related issues and requirements including those perils excluded under your policy and how your liability cap applies to such.
• The applicant is the one who must assure that their insurance coverage, language and the DHS certification letter are written to best protect them. 

Just because the DHS has approved your insurance, they are by no means “endorsing” your insurance program as adequate in scope or coverage to protect your interests nor, even to fully comply with the SAFETY Act requirements.

The DHS staff who review the insurance information you gave them and compose certification letters are not insurance experts.  They take information at face value.  Be sure your application is accurate.  Your policy will then need to be modified to assure compliance.  The only exception would be if you are purchasing a dedicated SAFETY Act policy.  Even those policies have “holes” in coverage.

Lawyers typically do not understand the complexities of the insurance markets and underwriters' reaction to a given risk scenario.  A knowledgeable insurance agent or broker is key.  Now, does that agent or broker know SAFETY Act well?  They need to!

Some very basic examples of problematic issues can include:

• TRIA –Terrorism Risk Insurance Act coverage is often used to satisfy the SAFETY Act insurance requirements.  TRIA and SAFETY Act have different coverage “triggers”. In some cases, SAFETY Act protection could apply to a given terrorist event but that same event does not trigger TRIA insurance coverage.  Where are you now?  Where is your cap?
• NBCR Exposures – SAFETY Act Designees who are involved in the detection, response to, or mitigation of Nuclear, Biological, Chemical or Radiological events (“NBCR”) most likely DO NOT have insurance coverage for these exposures under their liability program. Where are you after an event occurs?
• If your policy, strictly by its contractual language, “technically” covers a given scenario, how does your underwriter feel about this exposure?
• How will your underwriter react when he or she realizes that the insurance required by SAFETY Act mandates that every entity up and downstream in your products lifetime must be included as an additional Insured under your policy?  If the DHS has waived this requirement in your certification letter based on their interpretation of the regulation (Final Rule), two issues arise. First, the statute is clear, will their waiving the requirement stand up in court as it certainly will be tested. Second, if the regulation does hold up, due to the nature of the regulation, your insurer’s right to pursue recovery from someone who may actually be more responsible for the loss cannot be exercised.  Neither scenario will be well received.
• If the limit of liability required by SAFETY Act for a given QATT is less than what you actually carry for all of your exposures, have you modified your policy to address this change?  If not, and there is actually more coverage available after a loss, where will the courts view your cap?  Will your policy respond?  Will your protection under SAFETY Act be challenged?

Anyway, the point is that you must fully understand the ramifications of SAFETY Act on your insurance, your insurer, you coverage and not jeopardize any of your protections provided under the SAFETY Act.  We use detailed checklists and strategies that mitigate most of these issues to assure maximum protection and minimum cost under both the law and your insurance. 

Limits of Liability Required

The limits of liability required will depend on both premium cost and the exposures at the time of application. The law specifically states that applicants will not be required to obtain more insurance than is available at prices that do not unreasonably distort the cost of providing the product or service.

• It is critical to understand that the SAFETY Act provides specific liability caps and affirmative defenses. It is not an insurance product, alternative, waiver, hold harmless or a government indemnity such as under PL 85-804.
• The successful applicant will be required to carry and maintain insurance that provides third party liability coverage for terrorist acts. The SAFETY Act does not mandate your insurers to provide this coverage as in TRIA.
• The dollar limit of liability requirement is determined by the DHS during the application process. In addition to the limit of liability required, the legislation and its regulation mandates specific policy coverage / wording. 

Non-Terrorist Related Events

Because certain anti-terror related products and services may have other inherent risks due to their very nature, in is important to understand that SAFETY Act protections do not apply to any claim that does not arise from a designated act of terrorism. The Act will not protect against any other risk. Examples of anti-terrorism products or services with other inherent risks include weapons, electric fences, chemicals, explosives, x-rays, vaccines, false alarms, false arrest etc.

This is also a key insurance wording and coverage related issue as to limits and which policy responds to what event.

Our Core Services:

• Free Initial Consultation

• Help Reduce Your Costs

• Detailed SAFETY Act Applicability Evaluation

• Evaluate Your Exposures

• Review Your Overall Terrorism Financial Protection Strategies

• Provide Cost Effective Solutions

• Provide Reports as Requested

• SAFETY Act Application Support

• Provide Updates & DHS Feedback

• Negotiate with DHS, Lawyers, Brokers and/or Insurers as Needed

• Evaluate Existing Approvals for Issues & Conflicts

• Review Insurance Program for Conflicts, Compliance, Adequacy and Any Potential Savings

• Review Contracts & Agreements for Conflicts, Issues, Compliance and Modifications Needed

• Assist in Upgrading Existing SAFETY Act Approvals

• Help You Use SAFETY Act to Better Market Approved Products or Services

• Help Create an Overall SAFETY Act Strategy Plan for You, Your Customers, Suppliers or Subcontractors

• Provide Expert Consultation and Access to Key Business Partners as Needed

• Consult on Other Terrorism Related Financial Protection Strategies & Solutions 

 

Contact Us

By e-Mail

       INFO@SAFETYACTCONSULTANTS.com

Online by Web-form

Phone:  (847) 381-0410

US Toll-free:   (877) S--ACT--HELP 
                               (877-722-8435)

Fax: (847) 381-1015

Mailing Address:

SAFETY ACT CONSULTANTS
P.O. Box 4028
Barrington, IL 60011-4028

We look forward to assisting you in creating customized solutions critical to your organization and key in helping protect the public.

We will help you:

Protect Your Organization from enterprise threatening liability that will follow a terrorist event alleged to involve your organization's facilities or products in any way

Protect your bottom line from suits stemming from the use, manufacture, distribution, provision or deployment of anti-terrorism or terrorism response or mitigation related products, advice, aid, procedures, technologies or other services

Save Money on both new and existing insurance programs, the ongoing cost of risk as well as the overall SAFETY Act process

Increase Your Revenue by using SAFETY Act approval to help market your products, advice, facilities, technologies or services including cyber or network related

Thoroughly understand the SAFETY Act as well as the regulations that implement it

Thoroughly understand the SAFETY Act application process

Evaluate the Act's benefit to your organization, insurance,  products, suppliers, vendors and customers

Determine if SAFETY Act
protection can apply to a given product, facility, technology, procedure and/or service

Describe and review the Act with your risk management, legal, upper management, finance, engineering, and marketing groups as needed 

Evaluate the time demands, costs and difficulty of the application process for your unique exposures

Manage the entire application process through completion

Evaluate insurance programs for adequacy in coverage, limits, protecting your liability cap savings, insurer and SAFETY Act compliance

Evaluate contracts and other agreements for conflicts, issues adequacy as well as insurer and SAFETY Act compliance

Provide options for minimizing cost of insurance and risk while maximizing coverages

Arrange for outside experts as appropriate for your specific needs including experts in technical, legal, insurance and political affairs as well as physical and financial asset, business income and supply chain protection

Monitor the SAFETY Act status of your suppliers, vendors, subcontractors and customers

Negotiate with the DHS, insurance brokers, insurers and/or lawyers if potential problems, conflicts, limitations, potential savings or enhancement possibilities exist

Create a standardized process to coordinate and manage all SAFETY Act related activities for existing, planned or future exposures as well as third party approvals (i.e. your vendors)

Post approval support including any changes in your insurance, the insurance market, insurance costs; changes in your approved products or services; periodic review of compliance and other services you deem necessary

Advise on other terrorism related financial protection strategies including contractual protection review, FARs, Public Law 85-804, Government Contractor Defense - "Boyle", captive utilization and/or formation, conventional and non-conventional terrorism insurance coverages, TRIA applicability and access, etc.