Almost before the smoke cleared from the World Trade Center attacks, insurance companies were making plans to exclude losses from any future terrorist attacks from basic casualty insurance coverage. The real estate industry has borne the brunt of this exclusion, and real estate lenders have been left with little guidance in how to deal with the post Sept. 11 environment.
Whether such lenders actually considered the risk of a major terrorist attack prior to Sept. 11 was largely immaterial since such perils were generally covered by basic property casualty insurance. The policies, such as they were, wherein terrorist-caused casualties were not specifically covered but were not excluded, provided sufficient coverage for many of the perils suffered on Sept. 11. In the aftermath of the attacks, however, insurance companies reexamined the risks attendant to providing coverage against terrorism and lenders have begun to evaluate the need to require such coverage from property owners on both newly originated loans and loans currently outstanding.
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