It matters who caused the destruction of Flight 17. But bad faith will not defeat potential insurance coverage for damage like this.
There are a couple of scenarios circulating in the press at this time. Each involves bad faith. Bad faith will not defeat possible insurance coverage for a catastrophic event like this, no matter who did it.
The Terrorism Risk Insurance Act, if it applied here, authorizes the Secretary of the Treasury, acting with the "concurrence" of the Secretary of State and of the Attorney General, to certify any act as an "Act of Terrorism" under TRIA. In that case, and so long as four conditions more or less are met, primary and excess property and casualty insurers are required to cover damages resulting from the declared act of terrorism.
The four conditions are:
1. The act is an act of terrorism.
Bad faith clearly does not matter here. In fact, every act of terrorism is an act done in bad faith.
But it is also clear that it matters who "done it". If a government caused the act and resulting damages to happen, is it an "act of terrorism"? Is there coverage under such as TRIA?
2. The act is dangerous to human life, property or infrastructure.
The death of Flight 17 and the deaths of all the passengers and crew on it clearly qualify.
3. The act resulted in damage within the United States.
This is not as quick to answer as it seems. Yes, Flight 17 was flying over the Ukraine when it was destroyed. That does not necessarily mean that there was no damage within the United States. What of damage claimed by any family members within the United States, is that not damage?
Whether this condition is met here, or not, it clearly does not depend on good faith or bad faith. Given the nature of the act, bad faith is irrelevant to the coverage determination -- even though bad faith is relevant to the world in this unspeakable tragedy.
4. The act has been committed by an individual or individuals to influence the policy or affect the conduct of the United States Government by coercion.
Once again, whether this condition can be met here, or not, it clearly does not bar bad faith conduct. If anything, this condition depends on bad faith conduct or this condition cannot be met.
So, it is worth repeating the focus of this article. It is not whether TRIA coverage applies or not. The focus, rather, is whether bad faith conduct will defeat potential insurance coverage for the damages resulting from the death of Flight 17 and its passengers and crew. It seems that bad faith will not defeat potential coverage for terrorism risk insurance.
It does seem, in contrast, that the identity of who "done it" may defeat this form of potential insurance coverage. This is a concept that will be carried forward on Insurance Claims and Issues Blog, http://www.insuranceclaimsissues.typepad.com/.
© 2014 by Dennis J. Wall. All rights reserved. No claim to original U.S. Government works.
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