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Terrorist attacks could spawn liability crisis for commercial property owners

A liability crisis could be looming for property owners. After the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon, the insurance industry is expected to exclude insurance coverage for acts of terror. Right now, the Senate is working on a bill to ensure adequate insurance for property owners.

Daniel J. Sitomer, head of the Construction and Environmental Group of Jenkens & Gilchrist Parker Chapin in New York, said that Sept. 11 has forced landlords to consider ensuring tenants’ safety and protecting the value of their properties. He expects plaintiffs’ lawyers likely will target building owner assets in forthcoming lawsuits.

"The only way to protect against potential claims, which may arise as a result of a crisis, is to create a comprehensive emergency management program before a crisis occurs," Sitomer said. "A team approach to address the development of what are, in effect, asset protection plans, must be developed immediately."

Sitomer’s approach is based on direct in-depth experience. More than a decade ago, Sitomer represented those impacted by the Gramercy Park steam pipe explosion that killed two Con Ed employees and the mother of a young child. In that situation, as a consultant and attorney, he managed the emergency response, and developed standards for the environmental testing, remediation and eventual re-occupancy of the affected properties. His efforts brought a resolution to the legal and building management issues.

Sitomer recommends building owners do the following:

1. Owners must know that the programs they’re implementing are sufficient to protect against future liability that the company they hire to develop those programs or systems is qualified to do so, and that the systems or programs are the most appropriate for their specific building.

2. Owners must develop comprehensive and effective communication programs that determine what information is be communicated to tenants and employees, and, just as importantly, how to do so without provoking unnecessary alarm.

3. Owners must review current building safety programs and make the needed modifications to take into account the new realities of terrorism.

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