This post is part of a series sponsored by TSIB.
You’ve worked hard to reach an acceptable outcome for your insurance renewal, answered countless underwriting questions, finally given your broker the contract to lock in the contract, and you’re faced with one more question to answer.
Do you accept or reject TRIA?
TRIA, or the Terrorism Risk Insurance Act, is government-sponsored terrorism insurance offered for liability and property insurance. It was created as a three-year program to provide stability to insurance markets by offering coverage for losses resulting from a terrorist attack following the September 11 attacks.
After the insurance industry deemed terrorism uninsurable, the federal government was asked to step in and provide coverage, similar to what it had already done with the National Flood Insurance Program. At that time, President George W. Bush signed the Terrorism Risk Insurance Act of 2002 on November 26, 2002.
Congress approved extensions to the law in 2005, 2007, 2015, and 2017. The most recent version, 2017, was renamed The Terrorism Risk Insurance Program Reauthorization Act, or TRIPRA, and provides coverage through 2027.
However, when it comes to property insurance, resorting to the government-backed TRIPRA program may not be the best way to insure against this risk. In the years since 9/11, the market has stabilized and an alternative market has emerged.
Requirements
In order for TRIPRA to be triggered, the attack must be certified as an act of terrorism by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General. For the purposes of TRIPRA, a terrorist attack must cause damage in excess of $5 million. U.S. government involvement would not begin until such a terrorist attack would result in a total loss of $200 million.
These organizations have not committed an act of terrorism since September 11, 2001, including the 2013 Boston Marathon bombings. Although the Boston Marathon bombings were an act of terrorism, the damage did not exceed $5 million. dollars to trigger TRIPRA coverage. Because TRIPRA is untested, it is difficult to know exactly how TRIPRA would respond in the event of a certified terrorist act.
Looking back at the 2017 Mandalay Bay shooting, which was not a terrorist attack, many claims remain controversial. From an insurance perspective, it may take years to resolve the issue of terrorism-related losses associated with such events.
Independent property insurance against terrorism
In contrast, standalone terrorism property insurance can cover:
- Damage to property
- Loss of income/loss of use
These policies apply to a single insured person rather than an entire population and are designed to respond to an act of terrorism committed for political, religious, philosophical or similar reasons. This scope of coverage is more comprehensive and clearly defined – which offers greater security in the event of damage. In general, stand-alone terrorism policies do not require that the event be certified by a government official as an act of terrorism or meet a specific harm threshold.
The price for this coverage may be slightly higher than what you would expect for TRIPRA coverage. However, when you consider the damage scenarios, additional insurance coverage and lack of reliance on TRIPRA rules, the standalone policy is worth the additional premium.
There would be a cost offset because the insured person does not pay the TRIPRA premium and the additional premium would not be oppressive.
In most cases, standalone terrorism insurance is designed to follow the terms of title insurance. Thus, this policy effectively expands the coverage of the principal property policy to include terrorism as an insured peril. Deductibles would most likely follow suit as well.
To return to the original question, given the improvements that a stand-alone directive offers to protect against terrorist property, it is worth considering. Contact TSIB to explore your options and protect your business.
subjects
Catastrophe natural disasters
Interested in disaster?
Receive automatic notifications for this topic.
Source link
2024-06-03 04:06:06
www.insurancejournal.com
