With increased frequency, Terrorists have been targeting “soft” targets both in the U.S. and abroad. Government Officials state that we can expect more such incidents in the future. What is a business owner to do?
Before we get to the question, a little history is in order. Prior to the 9/11 attacks, terrorism was not addressed in insurance contracts. However, after 9/11 all insurance carriers attached an absolute terrorism exclusion. U.S. Banks began to mandate coverage for Terrorism, and, with limited coverage available in the marketplace, Congress passed the Terrorism Risk Insurance Act (TRIA) of 2009, to alleviate the situation.
TRIA has evolved over the years since then but the basics are:
- The US Treasury provides a backstop to what insurance carriers can pay in a large Terrorist Incident.
- Insurance carriers are required to offer TRIA coverage on Commercial policies.
- In order for coverage to apply, the Secretary of the Treasury must certify that an act is “Terrorism” under TRIA.
- The eligible act should exceed $5 million in property damage to qualify.
Fortunately, the US has never had an eligible Terrorist Act certified, as the Boston bombings, San Bernardino and Orlando attacks did not meet the threshold requirements.
Unfortunately, since the coverage has never been tested, no one is 100% sure how TRIA would respond.
Okay, so how does this affect my business in Western PA?
- First, Terrorism is automatically covered and charged in all Workers’ Compensation policies, so no issues here.
- TRIA is required to be offered on all property and liability policies. You should have this option every renewal from your insurance carrier and/or broker. You should be offered TRIA coverage, along with a sign-off form to accept/reject, along with a separate premium quote, which will range from a few hundred to thousand dollars depending on the size of your business.
- If coverage is accepted, AND an incident is certified you should have coverage.
- If an incident is NOT certified, you would look for coverage under your regular property and liability policies, most likely under vandalism and/or assault and battery.