Survey: Terrorism Insurance Woes Hamper $11.5 Billion in Real Estate Deals 9/05/02
More than 200 real estate transactions totaling $11.5 billion have been canceled or slowed down because of the lack of terrorism insurance, according to a survey done by the Real Estate Roundtable. The results, released Sept. 4, indicate that transactions hampered by the insurance problem were in 12 states plus the District of Columbia. The locations include New York, New Jersey, Illinois and California, but also Florida, Georgia, Hawaii, Michigan, Ohio, Pennsylvania, Texas and Virginia.
Twenty-one of 28 respondents said they had obtained terrorism insurance in 2002, but more than two-thirds said their insurance didn't cover losses from chemical, biological or radiological acts. About half said their insurance had a cancellation clause of 60 days or less. An average of 40% of the respondents' premiums paid goes for terrorism coverage, the survey said. Project financing was the type of transaction cited most frequently, followed by building acquisition. Office projects were most affected, followed by apartments, industrial and hotel projects. Respondents said that delayed or terminated transactions affect 1,520 jobs.