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Terrorism Coverage Hurting Lending, Group Says

DETROIT-Liability insurance remains difficult to get for trophy-type buildings that could attract attention, says the Great Lakes Construction Alliance of Detroit. It has joined the call for federal legislation to provide safeguards for terrorism insurance.

By Robert Carr | Updated on March 04, 2002

DETROIT-Guy Snyder of the Detroit-based Great Lakes Construction Alliance says the cost and sometimes unavailability of insurance covering liabilities generated by an act of terrorism is impacting new construction. “Since Sept. 11, terrorism exclusions have become common in builders risk insurance policies, causing some commercial real estate lenders to back away from financing certain projects,” he says.

Especially hard hit are projects that are being proposed as “trophy type” buildings that are designed to attract considerable attention, Snyder says.

“Some insurers — such as Willis North America and American International Group — have created what are called a ‘terrorism coverage facility’ but I’ve been told their rates are not cheap,” he adds. “The reason? Fear among reinsurers.”

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