Terrorism Legislation Update


After a few weeks of discussion, the Senate finally passed the Terrorism Insurance Bill. The bill renewed the Terrorism Risk Insurance Act, which expired at the end of last year. Terrorism insurance provides coverage to businesses for potential losses due to acts of terrorism. This decision is important, as it continues funding for terrorism insurance.

Terrorism Insurance History

Prior to 9/11, standard commercial insurance policies included terrorism coverage.  After 9/11, that changed slightly. Now losses that involve “Terrorism acts” are insured through commercial insurance companies but funded or backed by the federal government. This was created under the Terrorism Risk and Insurance Act of 2002.

Terrorism Insurance For Business

Now each business has the option of purchasing terrorism insurance. Generally, the charge for this coverage is separate and identifiable to the policy holder.

For the coverage to be “triggered” the loss must be determined to be a “certified act” by the federal government. One important thing to remember is that acts of war are excluded from all insurance policies. According to the latest statistics, only about 66% of businesses purchase terrorism insurance. And an interesting note, the Federal Government has yet to determine if the Boston bombing is defined as an act of terrorism.


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