Aronson Insurance Blog

Terrorism Insurance Explained

The recent horrific events in Boston have brought about much talk of Terrorism Insurance, so we wanted to explain how it works:

The Terrorism Risk Insurance Act (TRIA) was signed into law in November 2002 to create a federal “backstop” for insurance claims related to acts of terrorism, providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism. Prior to 9/11, terrorism was included in most commercial insurance policies in the United States. After 9/11, many insurers decided to exclude terrorism from their contracts.

Under TRIA, the attack must be certified as an “act of terrorism”. Part of the definition for a terrorist act in the federal law states that the attack must have been “committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.” The definition requires that the attack be committed by foreign interests; an attack like the Oklahoma City bombing would not be covered by TRIA because it would be classified as “domestic terrorism”.

Basically, this act provides insurance coverage for terrorist acts; if terrorism insurance is not purchased and the act is deemed terrorism, the claim will be denied under the business’ policies. If officials don’t certify the bombings as a terrorist act, the business’ standard policy would apply.

Whether the Marathon bombings are deemed an “Act of Terrorism” will have significant financial implications for area businesses. Some businesses won’t have insurance coverage for building damage or lost income after their businesses were closed for over a week. For businesses that were affects by the Marathon Bombing, it is recommended that the owners gather documentation, contact their insurance carriers/brokers and retain professionals, such as accountants and attorneys.

If you have questions about TRIA, please call us today: 781-444-3050