Business Insurance for Active Shooter Events

Faegre Drinker joins our communities in sorrow over the heartbreaking mass shootings in Georgia and Colorado this month. While this article cannot ease the loss experienced by the victims’ friends and families, we share this in the hopes it will help members of the insurance and business communities seeking information in the wake of these tragic events.

With more Americans owning guns than ever before and mass shooting incidents on the rise, more businesses are turning to their insurers. While some insurers specifically offer active shooter or assailant coverages, there is the potential for coverage under Commercial General Liability (CGL) and other policies as well.

Firearm background checks totaled almost 40 million in 2020, compared to roughly 28 million in 2019. See, NCIS Firearm Background Checks. Gun sales surged during the coronavirus pandemic. Tragically, mass shooting incidents also continue to rise each year. A mass shooting involves “three or more killings in a single incident,” and the FBI defines “active shooter” as “one or more individuals actively engaged in killing or attempting to kill people in a populated area.” U.S. Department of Justice, Federal Bureau of Investigation, Active Shooter Incidents in the United States in 2019 (designating 28 shootings in 2019 as active shooter incidents killing 97 people and wounding 150).

In most jurisdictions, businesses are not liable for the acts of a criminal party, unless the criminal act was foreseeable. Even so, businesses may face significant risks and liability. In 2019, for example, MGM Resorts International agreed to pay up to $800 million to settle thousands of liability claims stemming from the 2017 mass shooting in Las Vegas and announced that its insurers would contribute up to $751 million toward the settlement.

Many commercial insurers specifically offer active shooter or active assailant coverages. These policies may include coverage for crisis management, victim counseling, medical disability, funeral expenses and death benefits, business interruption, property costs, third-party litigation, and prevention costs to aid businesses in assessing potential risk, training employees and developing response plans. No reported decision has addressed coverage under such a policy.

Businesses may also look to other insurance policies as well. CGL policies typically provide defense and indemnity coverage against third-party claims for bodily injury and property damage liability. These policies may not include crisis management coverage, and other coverage issues may arise including, but not limited to, whether shooting litigation involves an “occurrence,” the inclusion of an assault and battery exclusion or the policy not offering terrorism insurance.

Other sources of insurance may include professional liability policies, such as directors and officers liability, that may contain a crisis response endorsement. Workers Compensation and Employee Liability policies generally respond in the event of injury to an employee, but do not insure against third-party liability claims. For property damage and business interruption claims, companies may look to their first-party property policies for any available coverage. Umbrella or excess policy coverages may also respond to liability claims against a business for a shooting. Knowing where to look, and insurer offerings of specific coverages to address business liability concerns, can assist a company in preventing and responding to an active shooter event.