Over the past few weeks, North Korea has been testing Intercontinental Ballistic Missiles (ICBMs) and the United States has been saber rattling in response. This has alarmed many, and the fear of a nuclear strike, especially for those in Guam, Hawaii or even the West Coast has risen greatly. Multiple postings on Facebook have appeared advising readers what to do in event of a nuclear strike and what are the safest locations. On top of this, demonstrations in Charlottesville Virginia by the “Unite the Right” group and protesters led to three deaths and many injuries, and a declaration by the Attorney General that this was an act of domestic terrorism. Insurance professionals know that war, nuclear discharge, and riots are always excluded, but is there coverage anywhere for any related damage?

Policy Language

All policies exclude war, rebellion or revolution, and nuclear discharge. Nuclear discharge is excluded even if the discharge of the weapon is accidental, so if someone leans on the button and fires a nuclear device unintentionally, that is still excluded. Nuclear weapons are so dangerous there is no room for accidents. Nuclear radiation, reaction, or radioactive contamination are excluded as well, even if a weapon is not involved. Claims and suits that result from nuclear reactions are also excluded. War includes war, undeclared war, civil war, insurrection, rebellion or revolution; some policies also list warlike acts by a military force or personnel, destruction, seizure or use for a military purpose, such as private property; action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents. A few policies state that loss caused by the nuclear hazard will not be considered loss caused by fire, smoke, or explosion, even if these are considered named perils elsewhere in the policy. This wording appears in the homeowners HO 00 03 and ensures that if a nuclear blast creates a covered peril there is still no coverage. Having said that, the HO 00 03, HO 00 02, HO 00 06, HO 00 04, CP 10 30, CP 10 20, CP 10 10 state that direct loss by fire resulting from the nuclear hazard is covered. This is an ensuing loss clause and while the blast itself will not be considered a fire, smoke or explosion loss, any resultant fire, smoke or explosion loss will be covered.

For example, a 10 kiloton nuclear missile, the size North Korea tested in 2013, is fired at Guam and lands near the U.S. Naval Station. The missile explodes and sets fire to a nearby village. The burning of the village will be covered by the homeowners forms and the standard causes of loss forms for the commercial property policy.

Domestic Terrorism

Over the weekend of August 13 in Charlottesville Virginia demonstrations by Neo-Nazis and the Alt-Right led to deaths and injuries, and it has been called an act of domestic terrorism. But what is domestic terrorism? Section 2331 of title 18 of the United States Code of Laws defines international terrorism as seen below:

2331. Definitions

As used in this chapter—

(1) the term ''international terrorism'' means activities that—

(A) involve violent acts or acts dangerous to human life that are a violation of the criminal laws of the United States or of any State, or that would be a criminal violation if committed within the jurisdiction of the United States or of any State;

(B) appear to be intended—

(i) to intimidate or coerce a civilian population;

(ii) to influence the policy of a government by intimidation or coercion; or

(iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping; and

(C) occur primarily outside the territorial jurisdiction of the United States, or transcend national boundaries in terms of the means by which they are accomplished, the persons they appear intended to intimidate or coerce, or the locale in which their perpetrators operate or seek asylum;

(2) the term ''national of the United States'' has the meaning given such term in section 101(a)(22) of the Immigration and Nationality Act;

(3) the term ''person'' means any individual or entity capable of holding a legal or beneficial interest in property;

(4) the term ''act of war'' means any act occurring in the course of—

(A) declared war;

(B) armed conflict, whether or not war has been declared, between two or more nations;

or

(C) armed conflict between military forces of any origin; and

(5) the term ''domestic terrorism'' means activities that—

(A) involve acts dangerous to human life that are a violation of the criminal laws of the United States or of any State;

(B) appear to be intended—

(i) to intimidate or coerce a civilian population;

(ii) to influence the policy of a government by intimidation or coercion; or

(iii) to affect the conduct of a government by mass destruction, assassination, or kidnapping; and

(C) occur primarily within the territorial jurisdiction of the United States.

Domestic terrorism is therefore activities dangerous to human life that violate criminal laws of the country or the state, and appear to be intended to intimidate or coerce a civilian population, influence government policy by intimidation or coercion, affect the conduct of the government by mass destruction, assignation or kidnapping and occurs primarily within the territory of the United States.

In Charlottesville one person was killed when a car deliberately crashed into counterprotesters and many were injured. Groups with differing views converged at the site of a rally and as clashes broke out officials declared it an “unlawful assembly” and the governor declared a state of emergency. A review of many articles does not indicate that there was much if any property damage resulting from the gathering. The Attorney General has stated that the incident meets the definition of domestic terrorism as defined in statute and that the case is being investigated as such as well as a civil rights issue. The use of the term opens up broader investigate powers and brings a case under federal, instead of state, jurisdiction.

While the incident has been declared an act of domestic terrorism, since there is no real property damage TRIA would not be put into play. If there had been property damage, in order for the incident to fall under TRIA then not only the Attorney General but the Secretary of Treasury and the Secretary of State would also have to designate the incident as an incident of terrorism.

Victim Compensation

The Patriot Act includes a section on providing for victims of terrorism. Once a terrorist act has been declared, compensation is available in the way of grants to provide emergency relief. The text of the act is as follows:

SEC. 624. VICTIMS OF TERRORISM.

(a) COMPENSATION AND ASSISTANCE TO VICTIMS OF DOMESTIC TERRORISM.—Section 1404B(b) of the Victims of Crime Act of 1984 (42 U.S.C. 10603b(b)) is amended to read as follows:

''(b) VICTIMS OF TERRORISM WITHIN THE UNITED STATES.—The Director may make supplemental grants as provided in section 1402(d)(5) to States for eligible crime victim compensation and assistance programs, and to victim service organizations, public agencies (including Federal, State, or local governments) and nongovernmental organizations that provide assistance to victims of crime, which shall be used to provide emergency relief, including crisis response efforts, assistance, compensation, training and technical assistance, and ongoing assistance, including during any investigation or prosecution, to victims of terrorist acts or mass violence occurring within the United States.''.

This provides some compensation to those who have been injured by terrorist acts. While demonstrations so far have not led to property damage and looting, the risk is present. This part of the Patriot Act provides compensation for victims of terrorism.

Some things are just impossible to insure, such as war and nuclear explosion. There is no way to accurately rate and charge premiums for such exposure, hence the TRIA backup plan and other government provisions for compensation.