Insuring cities against terrorist attacks

handled anthrax-laced letters in 2001, Township Manager Jon Hammer said. “We’re not immune to that type of thing, as much as we’d like to think we are,” he said.

Hammer acknowledged the township’s terrorism coverage, which costs about $3,700 a year, wouldn’t cover damage to the post office or other properties not owned by the township.

Torrejón notes that in the case of a terrorist attack, township emergency responders who are injured or killed would be covered by a separate workers’ compensation policy, which is mandated by the state. All workers’ compensation policies include coverage for acts of terrorism. General insurance policies, which protect property and liability, don’t automatically provide for acts of terrorism.

The 9/11 attacks changed the way insurance companies cover terrorism. After 9/11, insurance companies began to exclude terrorism from their coverage until the federal government stepped in and required it be offered as part of the Terrorism Risk Insurance Act. In exchange, the government helps kick in money to cover the cost of a large-scale terrorist attack.

For most municipalities, the choice to buy terrorism coverage boils down to how likely a terrorist is to attack public buildings and whether officials want to roll the dice.

For big cities like Los Angeles or New York with landmark city-owned properties, it makes more sense to carry terrorism insurance, said Tom Schatz, president of Citizens Against Government Waste in Washington, D.C.“If you look at the worst terrorism acts, they were in places like New York, London, Sri Lanka,” he said. “I don’t recall seeing Allentown or any community like that.”

At the same time, no one expected the small township of Stonycreek, with a population of 2,221, to suffer a terrorist attack until a hijacked commercial airliner crashed into the cornfields near Shanksville on 9/11, Northampton County Councilwoman Ann McHale said.

“A perfect example would be Flight 93,” said McHale, who works in the insurance agency. “What’s to prevent another situation like that from taking place with Northampton County being so close to New York City? What if it was our government center?”

Somerset County, where Flight 93 crashed on Sept. 11 in Stonycreek Township, does not have terrorism insurance, said the county Director of Emergency Management Richard Lohr. Terrorism insurance isn’t something he’d ever really considered, he said. “I don’t even know what the cost of something like that would be,” Lohr said. “What do you put a dollar value on? I just don’t know.”

In Bethlehem, the maximum amount the insurance would cover in the event of a terrorist attack is $250 million, business administrator Dennis Reichard said. The city spends about $13,000 a year on terrorism coverage.

Earlier this month, Bethlehem police did have to dismantle a homemade bomb with help from the Bureau of Alcohol, Tobacco, Firearms and Explosives. It was a “sophisticated device,” capable of causing serious damage, police Lt. Mark DiLuzio said. No one has been arrested, and the reason the bomb was planted remains under investigation. DiLuzio declined to speculate on a motive or what would have happened if the bomb had detonated.

The bomb was not planted on city property, though; it was found in a cigarette receptacle in front of a freight delivery company on Win Drive, so it would not have been covered by the city’s terrorism insurance.

Torrejón writes that it is unclear exactly how many cities and municipalities in the Valley have terrorism insurance. Easton has it. Allentown did not respond to requests for information.

In the case of Bethlehem Township, the cost of terrorism insurance is less than 1 percent of what the township spends on general coverage, Township Manager Hammer said.

Sanko, whose association represents 1,455 second-class townships, said every township has different factors to weigh, but officials should look closely at their terrorism coverage, read the fine print and weigh the risk versus how much the coverage costs, particularly in tough economic times. “If it doesn’t cost anything, it’s probably not worth very much,” he said.