Haris Ashley
Homeowners insurance typically does not specifically mention terrorism, but it covers damage to property and personal possessions due to fire, explosion, and smoke, so acts of terrorism are generally covered. Condominium or co-op owner policies also cover damage to personal possessions resulting from terrorist attacks. However, damage to common areas like the roof or basement would only be covered if the condo/co-op board purchased commercial terrorism coverage. Before 9/11, terrorism coverage was included in standard commercial insurance policies, but now it is usually offered separately at a higher price. The Terrorism Risk Insurance Act (TRIA) ensures that terrorism coverage is available to commercial policyholders, but it is not mandatory to purchase it.
| Characteristics | Values |
|---|---|
| Homeowner's insurance coverage for terrorism | Standard homeowner's policies do not specifically mention terrorism, but they cover damage to property and possessions due to explosion, fire, and smoke, so acts of terrorism are generally covered. |
| Condominium or co-op owner policies | Cover damage to personal possessions resulting from terrorist acts. Damage to common areas is only covered if the condo/co-op board has purchased commercial terrorism coverage. |
| Renter's insurance coverage for terrorism | Standard renter's policies generally cover damage to personal possessions due to explosion, fire, or smoke from a terrorist attack. Coverage for the apartment complex must be purchased by the landlord. |
| Worker's compensation policies | Coverage for terrorist acts cannot be excluded from worker's compensation policies in any state, and it is the only insurance that covers acts of war. |
| Health and disability insurance policies | May provide coverage for loss of life, injury, or sickness resulting from a terrorist attack. |
| Business insurance coverage for terrorism | Terrorism coverage is typically offered separately or as an add-on to standard commercial property insurance. It covers damaged or destroyed property and may also cover business interruption losses and liability claims. |
| Terrorism Risk Insurance Act (TRIA) | A federal program that provides a backstop for commercial insurers and ensures that businesses have access to adequate resources to recover from terrorist attacks. It requires insurers to make terrorism coverage available to commercial policyholders but does not mandate its purchase. |
| Exclusions | Nuclear, biological, chemical, and radiological (NBCR) events are typically excluded from terrorism insurance policies, except for life, health, and workers' compensation insurance. Cyber-attacks are generally not covered as well. |
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What You'll Learn
- Home insurance covers damage to property and possessions due to fire, smoke and explosions, so acts of terrorism are generally covered
- Condominium or co-op owner policies provide coverage for damage to personal possessions, but not common areas, unless commercial terrorism coverage is purchased
- Renters policies will generally cover damage to possessions, but the landlord must purchase terrorism insurance coverage for the building itself
- Health and disability insurance policies may provide coverage for loss of life, injury or sickness resulting from a terrorist attack
- Business losses may be covered for terrorism in a variety of ways, depending on the nature of the loss
Home insurance covers damage to property and possessions due to fire, smoke and explosions, so acts of terrorism are generally covered
Home insurance covers damage to property and possessions due to fire, smoke, and explosions, so acts of terrorism are generally covered. However, this was not always the case. Before the terrorist attacks on the World Trade Center in 1993 and the Oklahoma City bombing in 1995, insurers did not consider terrorism a risk when underwriting commercial insurance policies. After the 9/11 attacks, reinsurers drastically reduced their terrorism coverage or stopped offering it altogether, causing US insurers to struggle with covering the risk. As a result, terrorism insurance became unaffordable for many.
In response to this, the US government passed the Terrorism Risk Insurance Act (TRIA) in 2002, which was later reauthorized in 2015 and 2019. This Act ensures that terrorism coverage is available to commercial policyholders, although it is not mandatory for insureds to purchase it. The Act also allows for a public/private risk-sharing partnership between the federal government and the insurance industry to share losses in the event of a major terrorist attack.
While standard homeowners' policies do not specifically mention terrorism, they typically cover damage to property and possessions caused by explosions, fire, and smoke. Therefore, acts of terrorism are often included in this coverage. Condominium or co-op owner policies also usually provide coverage for damage to personal possessions resulting from terrorist acts. However, damage to common areas of a building, such as the roof, basement, elevator, boiler, and walkways, would only be covered if the condo/co-op board has purchased commercial terrorism coverage.
Renters' policies are similar to homeowners' insurance in that they typically cover damage to personal possessions caused by explosions, fire, or smoke resulting from a terrorist attack. However, terrorism coverage for an apartment complex must be purchased separately by the property owner or landlord.
It is important to note that terrorism coverage may vary depending on your location and insurance provider. Some states, such as California, Florida, Georgia, New York, and Texas, may have different regulations and offerings regarding terrorism coverage. Therefore, it is advisable to carefully review your insurance policy or consult with your insurance provider to understand the specific coverage provided in your homeowners' or renters' insurance policy.
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Condominium or co-op owner policies provide coverage for damage to personal possessions, but not common areas, unless commercial terrorism coverage is purchased
Standard homeowners insurance policies do not specifically mention terrorism. However, as they cover damage to property and personal possessions due to explosion, fire, and smoke, acts of terrorism are generally covered. Condominium or co-op owner policies also provide coverage for damage to personal possessions resulting from terrorist acts.
However, when it comes to common areas of a building, such as the roof, basement, elevator, boiler, and walkways, the situation differs. Damage to these areas would only be covered if the condo or co-op board has purchased commercial terrorism coverage. This distinction is important because it means that while individual unit owners may have some protection for their personal belongings, the building as a whole may not be fully covered unless specific commercial terrorism coverage has been obtained.
It is worth noting that standard renters policies, like homeowners insurance, typically cover damage to personal possessions in the event of a terrorist attack involving explosions, fire, or smoke. Nevertheless, for renters in an apartment complex, it is the responsibility of the property owner or landlord to purchase terrorism insurance coverage for the entire complex. This distinction between individual unit coverage and coverage for common areas and the overall structure highlights the complexity of insurance policies and the importance of carefully reviewing the specifics of any insurance contract.
Additionally, it is worth mentioning that, prior to 9/11, standard commercial insurance policies often included terrorism coverage at no additional cost. However, in the aftermath of the 9/11 attacks, the insurance landscape changed significantly. Reinsurers reduced their terrorism coverage or stopped offering it altogether, leading to increased premiums for those seeking terrorism insurance. As a result, the Terrorism Risk Insurance Act (TRIA) was enacted in 2002, creating a federal loss-sharing program for certain insured losses resulting from certified acts of terrorism. This act has been reauthorized multiple times, with the most recent reauthorization extending the program through December 31, 2027.
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Renters policies will generally cover damage to possessions, but the landlord must purchase terrorism insurance coverage for the building itself
Standard homeowners insurance policies do not specifically mention terrorism. However, as homeowners insurance covers damage to property and personal possessions due to explosion, fire, and smoke, acts of terrorism are generally covered. Similarly, renters insurance policies do not explicitly mention terrorism, but they typically cover damage to possessions in the event of a terrorist attack. This includes damage due to explosion, fire, or smoke.
While renters insurance covers damage to possessions, it is important to note that it does not cover losses due to floods. Additionally, renters insurance will not cover damage to common areas of a building, such as the roof, basement, elevator, boiler, or walkways. Coverage for these areas requires the landlord or condo/co-op board to purchase commercial terrorism insurance separately.
In the context of renters insurance, it is worth mentioning that it is not a legal requirement for tenants to have renters insurance. However, some landlords may require tenants to obtain renters insurance to protect their belongings from theft or damage. The cost of renters insurance can vary, but in Texas, for example, the average renters policy costs around $20 per month.
While renters insurance provides financial protection for tenants, landlords are responsible for purchasing terrorism insurance for the building itself. This type of coverage is typically offered separately from standard commercial insurance policies and comes at an additional cost. After the 9/11 terrorist attacks, reinsurers significantly reduced or discontinued their terrorism coverage offerings, making terrorism insurance less accessible and more expensive.
To address the challenges in obtaining terrorism insurance, the federal government intervened by passing the Terrorism Risk Insurance Act (TRIA) in 2002. TRIA requires insurers to offer terrorism coverage to commercial policyholders, although it is not mandatory for insureds to purchase it. The law has been reauthorized multiple times, with the most recent extension valid until December 31, 2027.
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Health and disability insurance policies may provide coverage for loss of life, injury or sickness resulting from a terrorist attack
Health and disability insurance policies may provide coverage for loss of life, injury, or sickness resulting from a terrorist attack. However, it is important to note that this coverage is not guaranteed and may vary depending on the specific insurance policy and the state in which it was purchased.
In the aftermath of the 9/11 terrorist attacks, reinsurers significantly reduced their terrorism coverage or withdrew it altogether. This resulted in higher prices for terrorism insurance, making it unaffordable for many. As a result, terrorism insurance is typically offered as a separate coverage option today, with rates reflecting the current risk.
The Terrorism Risk Insurance Act (TRIA) was enacted by Congress in 2002 to address this issue and provide a federal backstop for commercial property/casualty insurers. TRIA requires insurers to make terrorism coverage available to commercial policyholders, but it does not mandate the purchase of this coverage. Commercial property owners, such as those with office buildings, factories, shopping malls, or apartment buildings, must be given the option to buy terrorism coverage.
It is worth noting that nuclear, biological, chemical, and radiological (NBCR) events may be excluded from insurance coverage, as these types of events are considered fundamentally uninsurable. Under TRIA, if a state permits NBCR exclusions, insurers in that state are not obligated to provide coverage for those excluded events. Therefore, it is essential to carefully review your individual health and disability insurance policies to understand the specific coverage provided in the event of a terrorist attack.
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Business losses may be covered for terrorism in a variety of ways, depending on the nature of the loss
Terrorism coverage is provided by private insurers and reinsured by the federal government under the Terrorism Risk and Insurance Act (TRIA). This act was passed in 2002, following the 9/11 attacks, which resulted in massive financial losses and caused many insurers to cut back on their terrorism coverage or stop offering it altogether. The act was reauthorized in 2015 and 2019, with the latest reauthorization extending the Terrorism Risk Insurance Program (TRIP) until December 31, 2027. Under TRIA, commercial property owners must be given the option to purchase terrorism coverage. This includes owners of office buildings, factories, shopping malls, and apartment buildings.
Commercial terrorism policies cover damaged or destroyed property, including buildings, equipment, furnishings, and inventory. They may also cover losses related to business interruption, such as financial losses incurred when a business is forced to suspend operations due to direct damage to its premises or restricted access to the area after an attack. Terrorism insurance may also cover liability claims against a business resulting from a terrorist attack.
It is important to note that there are some exclusions to terrorism insurance policies. Depending on the state, fire following a terrorist attack may not be covered. Nuclear, biological, chemical, and radiological (NBCR) attacks are also typically excluded, except in the life, health, and workers' compensation lines of insurance. Additionally, reductions in business income not directly associated with a covered peril may not be covered. For example, loss of business due to customers' fear of traveling to a particular location or heightened security alerts would generally not be covered.
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Frequently asked questions
Standard homeowners insurance policies do not specifically reference terrorism. However, as homeowners insurance covers damage to property and personal possessions due to explosion, fire, and smoke, acts of terrorism are generally covered. Condominium or co-op owner policies also provide coverage for damage to personal possessions resulting from terrorist acts.
Standard renters policies, like homeowners insurance, will generally cover damage to personal possessions due to explosions, fire, or smoke caused by a terrorist attack. However, terrorism insurance coverage for the apartment complex itself must be purchased by the property owner or landlord.
Terrorism insurance covers damaged or destroyed property, including buildings, equipment, furnishings, and inventory. It may also cover losses associated with business interruption and liability claims against your business associated with a terrorist attack.
Premiums for terrorism coverage range from $19 to $49 per million of insured value, depending on the size of the company. The expense typically represents 3 to 5 percent of a company's property insurance costs.
