Looking to Cut Liability Insurance Costs and Exposures? SAFETY Act Might be the Key
Many US companies may be paying more for liability insurance than they should be. Why? Because they’re not taking advantage of provisions of the US SAFETY Act (Support Anti-terrorism by Fostering Effective Technologies Act).
The SAFETY Act
Passed after the terrorist attacks of September 11, 2001, the SAFETY Act was intended to encourage more companies to produce anti-terrorism products and services by allaying a principal concern among those companies: the legal liability of providing such products and services.
For example, if a company’s technology were to fail to prevent or detect an act of terrorism — including against a third party to which it provided products, advice, or services — it could have been subject to litigation and resulting punitive damages that could, among other things, erode its general liability and umbrella and excess casualty insurance coverage.
Under the SAFETY Act, if a user, manufacturer, or seller of anti-terrorism technology that’s been qualified by the Department of Homeland Security (DHS) is sued for failure of the technology, the company may be protected under the law by:
- A cap on legal liability.
- No joint and several liability for non-economic damages.
- No punitive damages or prejudgment interest.
- Exclusive federal jurisdiction for the court case.
Expansion of the Act
Originally, the SAFETY Act was intended to protect companies in the security industry — for example, manufacturers of bomb-screening equipment and providers of armed security. But the law has evolved, creating opportunities for companies in many other industries to have their security plans and strategies certified by DHS. Companies that can now benefit from the SAFETY Act include:
- Critical infrastructure, including financial institutions, securities exchanges, utilities, ports, and transportation networks.
- Office towers in major business districts and their tenants.
- Sports leagues, stadiums, and other entertainment venues.
Better Risks for Insurers Mean Better Rates for Insureds
In addition to the potential for reduced exposure to litigation that could reach the millions of dollars, a company that has received a DHS designation or certification under the law will generally be viewed as a better risk for insurers. That often translates into lower rates and other favorable terms and conditions.
The DHS has approved approximately 760 applications for SAFETY Act protections. If your organization uses or manufactures anti-terrorism products or has a robust security system in place to protect its operations, you should consider whether the SAFETY Act can bring you liability and indemnification protections.
Remember: That DHS seal of approval may be valuable in discussions with underwriters to yield better results at your next casualty insurance renewal.