What Is Terrorism Insurance and Should I Have it?

Terrorism insurance coverage is not what it used to be. Prior to 9/11, business owners got terrorism coverage free or for a small fee. Events of the past fifteen years have changed this.

As of 2002, the Terrorism Risk Insurance Act set out insurance coverage basics for terrorist attacks.

The act established that commercial property owners must be offered a terrorism coverage option. Private insurers provide the commercial policy, but it is reinsured by the federal government.

Premium rates are based on risk for attack. If your business is located in or near a potential target for terrorism, rates are higher.

A policy for a large business in an urban area may costs thousands per year, while less vulnerable areas can see annual premiums of just $25.

It is up to the Treasury Department to administer the program and officially declare whether an event is a certified act of terror – only then is compensation provided for the losses.

If an act is certified as terrorism, a business owner’s terrorism insurance kicks in to cover property damage or losses caused by the attack.

These may include damages to structures and/or vehicles and injury or death of workers. Nuclear, biological, chemical, radiological, and war events are not covered.

Currently, 60 percent of business owners in the U.S. carry terrorism insurance. Should you? Consider the following:

• Are you located near a potential target?
• What is at risk? (Do you have a lot of property, vehicles, and employees?)
• What is the policy cost?