Shooting Leads to Business Loss

In the wake of the tragic shooting in the Cinemark Theater in Aurora, CO on July 20th, 2012, the concern of America has rightly focused on the victims and their families. Much less attention has been paid to the Aurora Cinemark movie theater and its employees. Almost three months later, the theater is still closed, and plans for re-opening have only recently been scheduled for early 2013. Considering the magnitude of the tragedy, this response is not surprising.

From a business perspective, the Cinemark Theater suffered a major loss of income, and its employees endured severe trauma. Even if a few of the employees felt able to work again, their place of employment is closed. When the theater re-opens, it will likely experience a decline in business. Although some customers will return, many will think twice about watching a movie in the Aurora Cinemark.

Expenses and Lost Income

The most applicable insurance coverage to this sort of situation is not standard in business insurance policies, but is available for the clients of the Merriam Agency. This extra coverage, added by endorsement, is titled “loss of income due to workplace violence,” and will pay up to $100,000 for loss of business income due to the suspension of operations as a result of intentional use of, or threat to use, deadly force.

The Aurora shooting, in a movie theater, is a sobering but very real example of the suspension of operations due to workplace violence. While the doors are closed, the theater has no revenue; however, continuing expenses put the business in peril of losing money. Even if the business re-opened, the reduced income due to poor publicity could also lead to loss of income as a direct result of the violent incident. In both theses scenarios, lost income could be supplemented by workplace violence insurance, lessening the effect on the business. This coverage also includes up to $5,000 for hiring a public relations consultant to aid in the rehabilitation of the business’ image. This coverage, known in the insurance world as “extra expense,” could also be used for providing counseling to employees affected by the incident.

Risk Management Responses

What makes this coverage attractive to a business is the inclusion of payment for the “threat of deadly force.” This means that a bakery, restaurant, or department store that closed due to such a threat could have its lost income covered by insurance. Should a business receive a threat of violence and choose to close to protect its clients and employees, there would be coverage to provide money for essential salaries, fixed costs, and lost profit.

After the Aurora shootings, the world responded proactively, realizing this tragedy could easily be reenacted. Applications for firearm licenses in Colorado soared in the weeks following the incident. Police were posted at theaters around the country. The Paris premier party of the film was canceled and the red carpet rolled up. These actions, known in the insurance world as “risk management techniques,” all required a significant cost in time and money.

In these days of tragic news headlines, a prudent business owner needs to consider the threat of violence to their survival. Workplace violence coverage is an inexpensive solution. As a matter of foresight and expertise, the Merriam Agency offers this coverage. Please call us if you would like a quote for your business, workplace, or ministry.

James Dick, CPCU, AAI