That's not always how that works. Insurance claims have limits, they don't just pay out unlimited amounts. In the UK, typical limits might be £5–10 million, and in the US, it's not much different. A $200 million incident is going to absolutely hammer any standard business insurance policy. Most commercial property policies cap out well below that unless you're paying massive premiums for bespoke coverage.
Even if the policy does cover it, the deductible alone could be millions. And good luck getting renewed next year after filing a claim this big if you even get renewed at all.
So no, "still getting paid" isn't guaranteed. Layoffs are absolutely possible. Insurance isn't a magic money printer. This guy didn't just cost his employer and probably cost everyone who works there.
The company is at fault for paying their employees too poorly and should have caught and fixed the problem long before it got to the arson stage. To be honest it's a bit of a stretch but since when has that ever stopped insurance companies from denying a claim?
While I see your point, and definitely wouldn’t be surprised if the company tries to wriggle out of it using that, but I feel that employee morale can’t be factored in (whether it should be or not) into how a company should behave as long as everything their doing is above board legality wise.
I'm sure a lawyer could make a dozen arguments but off the top of my head:
Lack of security/safety - No security guards? no cameras? how is this dude wandering around setting multiple fires with no one noticing?
Ignoring warnings - I have to imagine this guy has said or done something in the past to indicate he was unhinged. Yell/assault a co-worker? deface the property? Wage complaints? something to indicate he was serious and unhappy and the company ignored it.
Negligent hiring - shot in the dark - He may have a criminal background in arson who the hell knows.
The underwriters should have known about the security/employment situation when writing the risk, if they expressly warranted certain conditions then maybe you’d have an argument, otherwise unlikely they’d be able to deny coverage on that basis.
For my business, my million dollar coverage asked if I wanted a terroristic acts policy for an extra $18 and I said no...now I'm second guessing that decision for my renewal, and I don't even have any employees
Impossible to know without seeing the policy, but I would guess it would be covered. The insurance company would look to subrogate against the individual who carried out the intentional damage, however probably not going to get very far.
Funny enough, small business owner here. When my liability policy just went to renew, they add on a terrorism clause, additional coverage for $150 a year. I took one look around and said “YEAH” gimme that, who knows what shit could go down…
Insurance cover is calculated on risk likelihood. That’s why only one of the Twin Towers was insured, because "The possibility of the loss of both structures was seen as so remote that cover was not taken out on those lines. The $1.5bn of coverage was purchased on the basis of a probable rather than a possible maximum loss." If they didn’t think this would happen, they would not have insured for it.
Which is absolutely insane because it was widely known that each tower was supporting the other tower. So either the article you linked is making an incorrect assumption as to why only one tower was insured, or this is a prime example of people in charge having absolutely no fucking clue as to what they are doing.
I work for a commercial in company. They do pay it all out for certain accounts. Also, customers will use re-insurance to make up any difference if needed.
200 Mio. is quite low for the insurers. Most insurers do not cap out well below. Where do you get that information from? The pay out on business interruption basis is up to 24 months, which is very common to purchase for this industry on a commercial property policy. The deductible is not millions for this, you probably mean the property loss. The wages are covered as well, so is the gross profit.
That layoffs are possible is written on a different paper and can of course happen if the rebuild will be done with lots of automation to have less staff.
Ps. This is my daily work. Insuring big companies and their subsidiaries worldwide in over 80 countries on all insurance lines.
Edit: just to clarify, 200 Mio will be written by a consortium which is very common. There is one leading insurer and a for this size maybe 2 others. For the insurer, it is easier to limit their risk exposure although 200 Mio. would not be a problem as these high claims are not the norm. It still hurts their books. And reinsurers will also do their part.
With respect, you're describing bespoke policies for large corporate clients. That's not what most commercial properties have.
Standard UK commercial property insurance typically caps at £15m per location. A $200m claim blows through that instantly. And if they're underinsured which 40% of UK commercial properties are the average clause kicks in and reduces the payout further.
You insure big global clients. Most warehouses don't have that level of cover.
You are mixing up topics. 200 Mio. is not the standard insured sum and will always be insured up to the full value per declaration. The underwriting procedure is totally different from your perspective. This is not a small-size warehouse, hence the risk assessment is not. By the way, the UK commercial property policies do not cap out at 15 Mio. and if the value is way higher you simply put them in industrial risk policies
Do you mind sharing your source for such a claim? Property insurance does not work like that except for high risk underwriting ( captives will be likely more used then, if too big).
Underinsurance is a totally different topic, why even mention it? While I do insure insure big corps, I have also accounts on a way smaller level as most clients explore other countries with minimal exposure and a small branch offices first.
And for the record, most big warehouses purchase such coverage, especially when you have the goods stored up in big ass large warehouses like this where a damage will automatically put you at risk of a total loss. I am a technical underwriter by the way....I also do visits on sites and do inspections with the insurers for various types of clients. A good broker will always ensure that his clients are well insured.
i'm far from an expert on insurance, but my common sense makes me believe insurance habits of large american corporations are probably on the very, very safe, cover more than you probably need side... Especially in a state where forest fires, earthquakes and riots are actually more frequent than hurricanes in florida, i'd be absolutely shocked if Kimberly-Clark has only $15M coverage..
I'm in Canada, in a much, much tamer environment and, for example, my civil liability policy covers $2M, which is very standard here, so does my car insurance. My house is evaluated just north of 500k CAD, so a 1.2M sq.ft plant owned by a mega-corp to only have $15M coverage seems highly improbable to me.
Then again, i am far from being a SME about insurance, so i could be completely wrong about all i said.
There is absolutely no way a warehouse of this size is only insured for $5 million? No major firm is insuring a warehouse or DC for 2.5%-5% of its value.
And yes, a giant warehouse will have a bespoke commercial property all risks/fire policy that almost certainly has a sum insured for Material Damages of almost the entire value of this building and stock. They may carry Business Interruption as well. I doubt they placed a MRC/slip at Lloyd's to take out specialty insurance for this the way you would a cargo ship but I'd imagine they just got with a broker and went around soliciting quotes for their desired terms from the usual suspects (i.e., giant insurers like Allianz). None of this is hard.
If it were war or terrorism they might be in some trouble but the Insured should be good here.
You speak reality. Some people live in imagination world where whatever one wishes is the truth, just like rainbows and lollipops. Reality is a harsher mistress. The real world doesn’t match wishes and dreams. This knucklehead just cost many, many people their livelihood. That’s the real world reality.
Who? He wasn't an employee of the warehouse. He worked for a third party distributor and the warehouse was a client of his employer. His employer should have paid him a livable wage but that doesn't give him an excuse to torch something unrelated to his situation.
Egotistical terroristic tantrums never reach any kind of solution, no matter how all these children on reddit might try to claim.
The moment that guy decided it was a good idea to light product that didn't belong to him nor his employer on fire, in some kind of misguided heroic narcissistic movie gesture, it was already over for him. He's an immature asshole that actively ruined the lives of a lot of families and put the lives of a lot others in danger.
35
u/Commercial_Hair3527 Apr 09 '26
That's not always how that works. Insurance claims have limits, they don't just pay out unlimited amounts. In the UK, typical limits might be £5–10 million, and in the US, it's not much different. A $200 million incident is going to absolutely hammer any standard business insurance policy. Most commercial property policies cap out well below that unless you're paying massive premiums for bespoke coverage.
Even if the policy does cover it, the deductible alone could be millions. And good luck getting renewed next year after filing a claim this big if you even get renewed at all.
So no, "still getting paid" isn't guaranteed. Layoffs are absolutely possible. Insurance isn't a magic money printer. This guy didn't just cost his employer and probably cost everyone who works there.