WASHINGTON – In the business of real estate, everyone knows it’s all location, location, location.
Unfortunately for businesses and organizations near the White House or other so-called "trophy" properties at high risk for terrorist attacks, location is causing owners, developers, moneylenders, and insurers big headaches.
According to insurance industry leaders, 70 percent of properties have lost their re-insurance policies since Jan. 1. Coverage for new non-residential construction projects is down 17 percent since this time last year.
To lend a little relief, President Bush is urging Congress to step in to create a safety net in which insurers won’t be left holding the bag if another terrorist attack causes catastrophic damage to U.S. properties again.
"It’s a jobs issue. If people cannot buy insurance on a construction project, they’re not going to build the project, and if they aren’t going to build the project that means someone is not working. We must deal with it and we must deal with it in a hurry," Bush, flanked by construction workers, told White House reporters Monday.
Bush is urging the Senate Democratic leadership to vote on a bill that would require the government to pay 90 percent of insurance policies if attacks cost policy holders between $10 billion and $100 billion in damages. The House passed a similar bill late last year.
So far, Senate Democrats refuse to bring a bill to a vote because of provisions that dictate caps on attorneys' fees and punitive damages in suits against building owners, security firms and other businesses that fail to protect individuals from terror attacks.
"Delete (the caps) from this legislation and we can pass this most important legislation," said Sen. Harry Reid, D-Nev.
Supporters say the government "backstop" would encourage insurers to continue to provide high-risk coverage because they would know the safety net is there.
"Insurers will know we can take some risk to stay in the marketplace because there would be some understanding that the government would step in," said Carl Parks, senior vice president of government relations for the National Association of Independent Insurers.
Parks, whose association represents 690 member companies that provide 33 percent of all property casualty insurance in the country, said estimates for all insurance payouts in New York are in the $50 billion range.
The next terror attack is much more imminent and the scope of potential damage is impossible to estimate, he said.
"When companies pay out these inordinate claims that nobody could have planned for, it diminishes their reserves. If insurers can’t take on more because they have exceeded reserves, than it impacts economic security."
The domino effect, Parks said, has already taken its toll. Banks are pulling out of real estate ventures because developers are having trouble getting coverage.
In his speech, Bush pointed to a $400 million Hyatt Corporation building project in Chicago that can’t get financing because the developer doesn't have terrorism insurance.
"There are other examples, as well. A $2 billion resort in Nevada ... (that) could provide 16,000 jobs, is on hold because they can't get insurance for terrorism. Imagine that. You know, (you) got the chance to employ 16,000 people, but because something hasn't happened in the United States Congress it's not going forward, and that's not right," Bush said.
The failure to get property insurance is not just limited to Washington and New York and it doesn't just threaten new properties, said Jay Hyde, a spokesman for the National Association of Real Estate Investment Trusts.
Sporting facilities, monuments and other high profile public and private real estate — even the Golden Gate Bridge — are about to lose coverage because insurance prices are becoming so unaffordable, he said.
"It’s not isolated to any town in the U.S. We’re looking at a growing drag on the economy as a result of the fact that many properties and associations are finding it difficult to find affordable insurance coverage," Hyde said.
Fox News' Carl Cameron contributed to this report.