Terror Insurance Bill Includes Right to Sue Attacked Companies

WASHINGTON – Senate Democrats on Thursday blocked a GOP attempt to limit lawsuits against companies struck by terrorists. Republican senators said the move would bring a presidential veto for legislation designed to help cover insurance costs of possible future attacks.

The Senate, by a 50-46 party-line vote, rejected a GOP amendment to eliminate punitive damages in lawsuits against companies whose buildings are hit by terrorists.

Republicans accused Democrats of trying to protect trial lawyers in an election year. Democrats said Republicans were looking out for businesses that are major GOP donors.

Without the limit, Republicans said, President Bush would veto the bill.

"The administration cannot support enactment of any terrorism insurance bill that leaves the nation's economy and victims of terrorist acts subject to predatory lawsuits and punitive damages," the White House said Thursday.

"If we're serious about making a law and not simply playing legislative games, we ought to pass a bill that has some chance of being signed," said Sen. Mitch McConnell, R-Ken.

After Sept. 11, many insurers limited or dropped coverage for casualty and property losses in acts of terrorism because insurance companies faced record payouts of $30 billion to $50 billion.

The House last year passed legislation under which the government would help insurers continue to offer terrorism insurance by agreeing to pick up, for at least one year, 90 percent of losses in any major attack.

But under the Senate bill, the insurance industry would have to pay $10 billion of insurance costs for terrorism attacks for two years. Beyond that level, the government would cover 90 percent of costs; the insurance industry would pay the remaining 10 percent.

The Treasury secretary would have discretion to extend the program for a third year, in which case the industry would be responsible for the first $20 billion in costs. There would be a $100 billion cap: the secretary would have to go to Congress if costs exceeded that amount.

The bill also would consolidate civil lawsuits in federal courts and bar the use of government money to pay punitive damage awards.

But the administration and Republicans want an outright ban.

Democrats "appear more concerned about protecting the rights of personal injury lawyers to seek punitive damages against American victims of terrorism," McConnell said.

Democrats said limiting punitive damages would only allow corporations to slack off on their security at the cost of their workers' lives.

"Without the threat of punitive damages, the corporation can decide it's more cost-effective to continue cutting corners despite the risk to American lives," said Sen. Patrick Leahy, D-Vt.

States already have their own laws about punitive damages, Leahy said, and rewriting them "for the benefit of private industry at the expense of future terrorist victims and their families is not right."

Not voting were Sens. Lincoln Chafee, R-R.I.; Mike Crapo, R-Idaho; Jesse Helms, R-N.C.; and independent Sen. James Jeffords of Vermont.