by Chris on July 3, 2011

As the Bed Bug Epidemic escalates, property owners continue to grapple with the tiny bugs that have caused big problems.

Extensive publicity, including a recent finding that the bugs may be able to spread diseases, is shedding light on the scope of the problem and the liability landscape continues to evolve.

Bed bug infestation incidents have given rise to a range of allegations and claims including bodily injury, property damage, and mental anguish.

In addition, hotel and residential real estate companies involved in a bed bug outbreak may incur costs to remediate the infestation, suffer revenue loss, and incur expenses associated with managing the crisis. Any landlord involved in an infestation also faces significant damage to reputation.

Most standard Property and Casualty insurance policies provide little, if any, coverage for this emerging exposure. To meet the growing demand from hotel, hospitality and residential property owners, insurance carriers are venturing into the business of Bed Bug Insurance.

One such product, called Bed Bug Infestation Recovery Insurance ™ (BBIR) offered by global insurance broker Willis Group Holdings PLC, goes beyond what is generally available under standard property and liability policies. Coverage includes the cost of decontamination services, rehabilitation expenses, and lost profit due to business interruption. The policy also provides crisis management services, including a hotline and assistance coordinating with regulatory authorities, as well as limiting bad press.

“The crisis management component of this program is critical,” said John Lafakis, Senior Vice President and Program Manager for BBIR. “Any bed bug outbreak big or small has the potential to damage an organizations’ reputation, resulting in financial loss. The BBIR product includes a team of experts that can respond and coordinate with customers, the media, and regulatory authorities. This will go a long way towards minimizing the impact of an occurrence,” he said.

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