Terrorism is an unfortunate reality that can impact anyone without warning. As insurance is all about preparing for the unexpected, it is important to understand the terrorism insurance coverage options available to offer your investor clients.
REInsurePro offers private terrorism insurance as an alternative to TRIA. Policies fit within our monthly reporting form and can be standalone or added to existing coverage.
REInsurePro’s Terrorism and Political Violence coverage protects investors’ properties from the following losses:
REInsurePro’s Terrorism insurance coverage is not available in Chicago, IL and New York, NY. Locations with more than eight units in Boston, Houston, Las Vegas, Los Angeles, and Seattle are not eligible for this coverage.
Our offering is $1 per unit per month. We believe this coverage is extremely important, and especially valuable considering its low cost. As such, Terrorism insurance coverage is included on all eligible properties unless declined by the investor.
| TRIA | REInsurePro | |
|---|---|---|
| Must the event be certified as an act of terrorism by the US Secretary of the Treasury for coverage to be available? | Yes. Coverage is not available for noncertified acts. | No. This is not a requirement of REInsurePro’s offering. |
| Must the act cause more than $5,000,000 in damage (as determined by the Treasury) for coverage to be available? | Yes. Coverage is not afforded unless this threshold is met. | No. This is not a requirement for REInsurePro’s offering. |
| What determines premium costs? | TRIA’s premiums are based on a percentage of the property premium. | REInsurePro’s offering is a fixed cost per location at $1 per month per location. |
Frequently asked questions and answers about REInsurePro’s Terrorism insurance.
In our program, an act of terrorism is defined as an act or series of acts, including the use of force or violence, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organization(s), committed for political, religious, or ideological purposes including the intention to influence any government and/or to put the public in fear for such purposes.
The Terrorism Risk Insurance Act (TRIA) is a United States program enacted following the 9/11 attacks. It created an insurance offering to provide compensation for certain insured losses resulting from certified acts of terrorism. For TRIA to be “triggered” and claims to be paid out, the following must happen:
Unfortunately, this program is not very consistent in the decision of what qualifies as an Act of Terrorism and has yet to pay out on any event. While the 2019 El Paso Walmart shooting was certified as an act of terrorism, the 2013 Boston Marathon bombings were not.
Let’s say you have an investor client that owns and rents out a condo in one of the buildings along the route of the Boston Marathon. As a result of an act of terrorism, the condo is damaged and rendered uninhabitable. This damage and loss of income is likely not covered under a standard property policy. Although explosion is a covered peril under almost all policies, because it was a terrorist act, your client’s claim could be denied under the terrorism exclusion. Unfortunately, because the incident has not met the threshold for a certified act of terrorism under TRIA, a payout is unlikely.
TRIA was designed to cover incidents like 9/11, large-scale attacks of mass destruction. In contrast to huge, well-funded foreign organizations, most acts of terrorism or political violence nowadays are small-scale, lone wolf strikes like mass shootings.
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Prior to the September 11, 2001 attack on the World Trade Center towers and the Pentagon, terrorism coverage was a standard component of most insurance policies. The financial toll of 9/11 caused coverage costs to skyrocket, and many insurance companies stopped offering it completely.
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