Terrorism Insurance?

May 4, 2011 No Comments »


After the killing of Osama bin Laden over the weekend, interest in “terrorism insurance” has risen considerably.

In fact, the U.S. State Department warned of “enhanced potential for anti-American violence,” the Insurance Information Institute said this week in a press release.

The III noted that before the September 11th attacks, terrorism exclusions were “virtually nonexistent” on commercial insurance policies sold stateside.

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In other words, if your business came under attack, you would have likely been covered.

But we all know the world changed that day, and shortly after, insurance companies took measures to exclude terrorism coverage from their commercial U.S. policies.

Fortunately, the Terrorism Risk Insurance Act (TRIA), enacted in November 2002, established a public/private risk-sharing partnership in which the federal government and the insurance industry agreed to split losses in the event of a major terrorist attack.

The current TRIA law extends through December 2014.

Terrorism Coverage is Mandatory…Kind Of

It is mandatory for insurance companies to offer terrorism coverage on commercial property insurance policies…the government forces them to do so.

But it IS NOT mandatory to purchase this coverage.

When you receive a premium quote for commercial insurance, you will get two insurance premium options. One with TRIA coverage and one without.

What Can’t Be Covered by Terrorism Insurance?

The Fed’s “carved out” a few types of insurance they will not cover. Here’s the list:

– Federal and Private Crop Insurance
– Livestock Insurance
Private Mortgage Insurance
– Title Insurance
– Financial Guaranty Insurance of single-line guaranty insurers
– Medical Malpractice Insurance
Flood Insurance
– Reinsurance
– All Types of Life Insurance

Note that insurers are solely responsible for terrorism losses on non-TRIA lines of insurance, such as private passenger auto and homeowners insurance, along with group life insurance.

Contact your insurance company or independent insurance agent to see when and if you’re covered in the event of a terrorist act.

The September 11th terrorist attack was the largest loss in global insurance history, with property/casualty insurance and reinsurance companies recording a staggering $32.5 billion in losses.

Property, business interruption, aviation, workers compensation, life and liability insurance claims were all paid out as a result.

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