What is Terrorism Insurance?

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Terrorism insurance provides businesses with protection against the unpredictable nature of a terrorist attack. An act of terrorism can occur anywhere and at any time.

Prior to 9/11/2001, terrorism coverage was a standard coverage on most insurance policies. The financial impact from 9/11 attacks caused coverage costs on terrorism to increase significantly. As a result, many insurance companies stopped offering terrorism coverage. The U.S. government attempted to improve the lack of terrorism coverage by introducing the Terrorism Risk Insurance Act (TRIA). 

Since 2002, the act has been renewed 4 times. The current reauthorization is expected to expire in December 2027. 

What is TRIA? 
Following the 9/11 attacks the Terrorism Risk Insurance Act (TRIA) program was created. TRIA provides insurance compensation for certain insured losses that are a result from certified acts of terrorism. For TRIA to be “triggered” and claims to be paid out, the following must happen:

• The Secretary of Treasury must consult with the Attorney General and Secretary of Homeland Security and certify the attack as an Act of Terrorism.
• The terrorist act must exceed $5M in damage and the aggregate insured losses from certified acts of terrorism must be $200M in a year for coverage to begin.

TRIA’s intent is to cover major attacks of terrorism. Smaller scale terrorist acts (under $5M in damage) or acts not certified by Homeland Security as terrorist acts would not be covered by TRIA.  

Additional drawbacks to TRIA are:

• Any company’s international assets will not be included under coverage purchased in the United States
• In most cases and entire portfolio must be insured under TRIA
• The period of time that the U.S. government could take to certify an event, can impact a company’s ability to recover from losses

As a result of these drawbacks and the reduction of terrorism events since 2001, insurance companies have begun to offer standalone terrorism policies to compete against TRIA. 

Reach out and speak with one of our Risk Consultants and find out how you can keep your company safe.