Historically, terrorism insurance was not offered by most insurance companies because the premiums were too difficult to calculate due to the enormity of a terrorist act. Most terrorist acts cost businesses millions of dollars, so terrorism insurance was never an issue for most people until September 11, 2001. The 9/11 terrorist attacks changed the way insurance did business. The Terrorist Risk Insurance Act was introduced in November of 2002, and since that time, terrorism insurance has been a must-have. Since 2001, there have been many other terrorist acts in other countries, but the United States is still vulnerable. Another extension was added to the Terrorist Risk Insurance Act in December of 2007 that included chemicals, nuclear, radiological, and biological terrorist acts. The North American Industry Classification System has been working with the local government and insurance industry to try to find the best affordable terrorist insurance for all companies.
Typically, the coverage for terrorism insurance is as follows:
Eligibility of Insurers- Any company that owns commercial property and already has coverage for casualty insurance is eligible for terrorism insurance.
Coverage Terms- After a terrorist attack happens to a business that has commercial property and casualty insurance, the insurance will automatically go into effect.
Cap on Assistance- Insurance companies have placed a cap on assistance that cannot exceed over $100 billion each year.
Terrorist Insurance Coverage Terms- After a terrorist event, the federal government will pay eighty five percent of the cost, and the insurer will pay fifteen percent.
Lines that are covered- Commercial property, war coverage, and worker’s compensation is covered.
Mandatory Terrorism Coverage- Insurance companies must offer terrorist insurance to all companies who own commercial property. The terms of insurance must be the same for all companies that have terrorism insurance. Any losses that are not due to terrorism acts will be limited.
Assistance Recoupment- Surcharges for recoupment can be up to thirty percent a year in premiums for all insurance policy holders.
State Workers Compensation Fund- Workers compensation is included in the insurance, as well as insurance for state workers compensation, self insurance, and surplus carrier lines.
“Our blogs are for general education and information only and may not represent your unique needs. Coverages will vary. Please contact your insurance agent to verify your specific policy terms and conditions.”