Definition of Terrorism Insurance
Terrorism insurance works just like standard hazard insurance. If a loss occurs due to an act of terrorism instead of, say, a lightning-caused fire or accident, the insurance company is responsible for paying the victim for the losses.
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"Act of Terrorism" Defined
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Under the federal Terrorist Risk Insurance Program Act (TRIP) enacted after 9/11, an act of terrorism is any violent act dangerous or damaging to human life, property, or infrastructure within the United States or to a U.S. air carrier, vessel, or United States mission abroad, committed by an individual or individuals against U.S. civilians or the government.
Types of Policies
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Under TRIP, licensed U.S. insurers must include terrorist acts among covered events in their commercial "all risk" property and casualty insurance policies. Separately from the TRIP regime, workers compensation, disability and travelers' medical insurance policies may also cover terrorist acts.
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"All Risk" Policies
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"All Risk" property and casualty policies cover "certified"and "non-certified" acts of terrorism prescribed by TRIP. Per-occurrence limits, deductibles, locations, a one-year policy term and cancellation provisions mirror those of the property or casualty policy in which the coverage is embedded.
"Stand-alone" Policies
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Custom "stand-alone" terrorism policies insure against losses not covered or limited by TRIP and can be written for locations outside the United States. Policies have terms of up to three years and cost more than all risk policies, particularly in high-risk major metropolitan areas.
Traveler's Insurance
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U.S. residents can also buy international medical insurance policies that will pay for medical services, hospitalization and various related benefits abroad, if required because of injury or illness due to terrorist acts while traveling.
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References
Resources
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