Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Terrorism Insurance

Terrorism insurance has become an unwanted necessity for many American business owners. Since September 11, 2001 American people have become more and more aware of the potential threat that a terrorist act could have on their lives and assets.

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And in response to that threat, many are insuring themselves against this danger. Terrorism insurance offers the peace of mind that should there be a terrorist attack, the insured person can quickly recoup their losses and go back to building their lives.

The Terrorism Insurance Act

Although property owners are more eager to insure themselves against terrorist attack post 9/11, insurance providers have been slow to provide terrorism insurance for their clients. As a stop gap measure, the Bush administration established the Terrorism Risk Insurance Act (TRIA) in 2002.

TRIA, as it exists now, is designed to compensate insurance companies for 85% of the losses that clients with casualty and/or property insurance suffer during a terrorist attack.

Also under the Terrorism Act, many insurance carriers were required to provide terrorism insurance. This government stimulation broadened the availability of terrorism insurance and the amount providers were willing to offer.

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The Rush for Terrorism Insurance

Need Terrorism InsuranceHowever helpful TRIA may or may not be, the Act is designed to be a temporary measure. Extended for seven years in 2007, TRIA is scheduled to retire on Dec. 31, 2014. In preparation for 2014, many American business owners are hurrying to get themselves covered under insurance companies that offer this very specific form of business coverage.

The ever-narrowing scope of TRIA is also pressuring business owners to act. Over the years, the minimum damage covered by TRIA has steadily increased. When this act was originally penned, the act of terrorism had to cause at least $5 million dollars for the assistance to kick in.

As of 2007, the minimum is $100 million and individual insurance companies must suffer a loss equal to 20% of their premiums. As the attacks that warrant coverage dwindle in scope, business owners are realizing the need for distinct terrorism insurance policies offered by providers interested in protecting their customers.

The Varying Cost of Terrorism Insurance

One of the reasons that insurance companies have been slow to adopt terrorist insurance policies is because of the risk factor involved. The trouble lies with the relative infrequency of terrorist attack compared to other traumatic events. Unlike other catastrophes like home fires, car accidents or burglaries, the likelihood of terrorist attack can be difficult to gauge.

Who Needs Terrorism Insurance

A smaller incident pool means few data sets from which to gauge the likelihood of a terrorist attack. Insurance companies determine their premiums by probability: the likelihood that an event will happen and the cost of each event.

The likelihood of a terrorist attack is highly variable. With current risk models, it is difficult to determine likely target areas, the size of the damage and likely frequency. This makes it difficult for insurance providers to set a premium.

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Benefiting from the Current Market

Because of this variability, many insurance companies do not offer terrorism insurance under the umbrella of casualty and property coverage as they do for other disasters. The primary reason is because potential losses are high.

The September 11th attacks, for example, caused roughly $31.7 billion in losses. In an effort to avoid unforeseen losses of this magnitude, many insurance companies segregate terrorist attack as its own entity.

Attack Needs Terrorism InsuranceHowever, when it comes to those insurance providers that do offer coverage for terrorist attacks, this variability often benefits the consumer. The vast majority of US policy providers offer terrorism insurance coverage to policy holders who ask for it in their coverage package. But the price of said insurance varies widely. By comparing quotes from a wide range of insurance providers, customers may find low insurance premiums offered by insurance companies with different risk assessment formulas.

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Buying Low

Currently, because there has been no major terrorist attack on American soil since September 11, 2001, insurance companies provide terrorism insurance at lower premiums than ever before. And because the TRIA provides re-insurance for insurance companies should they suffer heavy losses, their premiums have come way down in the years since 2001.

Safety And Terrorism InsuranceAlthough insurance companies assume that the risk has decreased because of the lack of successful attacks, any signs like the 2010 attempted terrorist attack in Times Square and the 2009 attempted attack on a Detroit flight, indicate that risk is still high.

Business owners who understand the possible cost and impact of a catastrophic event are looking for the security of terrorism insurance and are getting in at the ground floor to obtain low rates in exchange for high payout.

The ability to lock in low rates is quickly disappearing. Those who pay attention to fluctuating insurance rates know that the terrorism insurance market is well on its way to stabilizing. As more and more business owners protect their assets with this type of insurance, insurance companies are looking for better and more precise ways to calculate the risk of terrorist attack.

What to Look For

Terrorism insurance in its current form is still a relatively new concept. Business owners are often less informed about what to look for in terrorism insurance as they are, say, damage or property coverage.

In short, terrorism insurance is any distinct policy or a subsection of larger coverage that guarantees to pay out a fixed fee for any loss of life or property incurred from a terrorist attack. The policy must also cover any delays or changes in businesses that are a direct result of the terrorist attack.

To Find Terrorism Insurance

But what is a terrorist act? The official definition of terrorism in the United States has changed in the years since September 11th, 2001.

Currently an “act of terrorism” is any dangerous act officially labeled as terrorism  by the Secretary of Treasure, the Secretary of State and the Attorney General.

This terrorist act must result in damage in the U.S., to foreign property labeled “US” or to a US mission. The act may be committed by actors from a foreign government or by those with no specific ties to any foreign governments or organizations.

Foreign Business Entities

Those with businesses or even homes overseas — especially in places with high conflict rates — find themselves most in need of terrorism insurance. These business owners must specifically seek out insurance providers that provide coverage internationally across a number of borders.

Terrorism Insurance ProtectionQuality coverage will cover physical assets. The primary assets, the physical buildings in which the entity does business, must have access to worldwide business property and liability insurance that covers terrorist attack in any and all countries that they do business in, including conflict areas.

Many policies also offer transit and cargo insurance which covers attacks on any vehicles associated with the business. This includes your physical business and any vehicles associated with it, and the employees. These attacks are common in conflict areas like Iraq and Afghanistan.

In areas that historically experience conflict, many insurance providers provide health coverage and life insurance coverage as well as protection against kidnapping and ransom and personal accident coverage.

The ability to quickly recover economically after a terrorist attack is critical for any individual or business. It may even be argued that this individual coverage, when viewed collectively, is important for the nation at large. The more seriously the risk of terrorist attack is taken, the sooner individuals, businesses and the country will be able to rebuild and move forward.

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