Businesses can’t claim Marathon loss

The Boston Marathon bombing forced businesses to shut down for weeks and suffer thousands of dollars of losses, but nearly a year and half later, it appears that the federal government is unlikely to label the explosions as an act of terrorism for insurance claims.

To qualify for a terrorism designation under the federal law adopted after the 9/11 attacks, an event has to cause losses of $5 million or more. As of April 2014, Marathon bombing claims for property and business interruption and amounted to $1.9 million, according to a state report.

“After review of the events in Boston, the secretary has not determined that there has been an “act of terrorism” under the Terrorism Risk Insurance Act,” a spokeswoman for the Department of the Treasury said in a statement on Thursday.

The Treasury Department has maintained this position for more than a year. Some local news reports Thursday inaccurately suggested that the department had made a new determination.

Terrorism insurance coverage is still new, and only 13.5 percent of the commercial property and business interruption claims filed after the bombing had separate terrorism coverage, according to the Massachusetts Division of Insurance.

Some Boston-area businesses continue to struggle to collect reimbursements for damages and lost business following the bombing, still wrangling with insurance companies over what constitutes a terrorist event.

Sir Speedy, a Boylston Street print shop, has sued its insurer claiming that it should be paid under its terrorism protection policy for losses and other costs it incurred while the business was closed for 14 days after the bombing. The insurer, New York-based Public Service Mutual Insurance, has asserted that without a terrorism designation by the federal government, the provisions of the polices are not applicable.

The secretary of the Treasury, secretary of state, and the attorney general have the authority to designate an event as terrorism. They haven’t.

But Jim Rudolph, a lawyer representing Sir Speedy, noted that the Boston Marathon bombing has been called an act of terrorism by President Obama and prosecutors trying one of the suspects, Dzhokhar Tsarnaev. He said his client wasn’t made aware when he bought the policy that the definition for insurance purposes was so narrow.

“It’s a ridiculous policy and shouldn’t have been sold in the first place,” Rudolph said. “If you read the fine print, it’s hard to collect.”

Based on the federal $5 million loss threshold, Frank O’Brien, a spokesman for the Property Casualty Insurers Association of America, a trade group, said he doesn’t expect that the Boston Marathon bombing will meet the terrorism standard for insurance.

But he defends the coverage. As with any ancillary insurance coverage, businesses need to assess their risk before making a purchase, he said.

“In this day and age, unfortunately, what we’re seeing, especially today, the risk of terrorism can be quite substantial,” O’Brien said.