What You Need to Know Before You Buy Terrorism Insurance
On September 11, 2001, the United States was forever changed. A coordinated terrorist attack had taken place on U.S. soil. In response to the devastation that occurred congress passed the Terrorism Risk Insurance Act (TRIA). The purpose of TRIA was to allow insurance companies to pay businesses for their losses in the event of a certified act of terrorism.
TRIA stood as a sort of “guarantee” to insurance companies that they would be able to cover their losses in the event of a terror attack so that it wouldn’t be detrimental to offer terrorism insurance protection for the companies that opted to participate in TRIA-backed insurance. Sounds like a good thing, right?
Since that time, there have been several high-profile terror attacks in the U.S., including the Boston Marathon attack, the San Bernardino attack, and the Orlando nightclub attack. The program began in 2002 and insurance companies have profited to the tune of nearly $40 billion from selling this insurance designed to protect businesses in the U.S.
Despite having three high-profile attacks on U.S. soil, these same insurance companies that have profited so well from the sale of TRIA terrorism insurance have not paid out one single dime to policyholders. Critics argue that this creates a risk-free investment for insurance companies who are under no obligation to pay out.
The problem is that in order for TRIA policies to pay out, according to The Guardian, the U.S. Secretary of Treasury has to “certify” an attack as a designated as an “act of terrorism”, which has not happened since then. Among other requirements, like the act being a violent or dangerous act to human life, property, or infrastructure, as part of the certification, losses (i.e. claims) must exceed five million dollars.
Making a Better Choice for Terrorism Insurance Coverage
Terrorist attacks are unpredictable. Some believe they are only going to increase in scale and intensity. Whatever you believe will happen from a political point of view, protecting your business with the right insurance coverage is a practical matter rather than a political one.
For most Americans, the threat of a terrorist attack is very real. That’s why it’s important to make sure that your business has appropriate coverage from an insurer that does not depend on TRIA to release funds or certify an attack as a terrorist event in order to pay out.
Look instead for companies that offer terrorism insurance coverage that includes coverage for acts of sabotage or terrorism of ideological, religious, or political purposes without having to obtain government certification as a terrorist act.
This type of coverage should meet any lender requirements that exist for terrorism insurance coverage and should provide you with peace of mind that your business is protected in moments like this without government certification that an act was certified as terrorism.
Stand-alone terrorism insurance covers things like:
- Damage to buildings and their contents (inventory, furnishings, fixtures, etc.)
- Business Interruption
- Loss of rent
- Defense costs
- First party active shooter coverage
- Biological, chemical, and nuclear coverage
- Coverage for threats
- Coverage for clubs, theatres, restaurants, hotels and more.
Terrorism insurance is typically offered separately or as a special edition—called a rider or endorsement to your standard commercial property insurance policy.
Terrorism is about spreading fear, confusion, doubt, and uncertainty. Dubious insurance coverage that relies on the government to release funds before it can pay out only adds to those negative feelings associated with terrorism.
Finding the right insurance protection for your business can help you shake the fears that a terrorism act can have on your business. It enables you to get the protection your business needs and deserves without concerns that it won’t be available to you when your hour of need arrives.
If you’re not sure you have the right coverage, you owe it to your business to take the time to make sure you get the right terrorism insurance coverage today.