Does Your Small Business Need Terrorism Insurance Coverage?

Does Your Small Business Need Terrorism Coverage?

This time of year, most of us would rather think about vacation, holiday gatherings and chestnuts roasting on an open fire–anything, in fact, except the possibility that terrorism could disrupt our lives. But given recent events, it’s prudent to know there are proactive steps that you can take to you can take to protect your business. Here are some quick facts about terrorism insurance to help you decide if you need this additional coverage.

Terrorism insurance coverage is a risk-sharing partnership between the federal government and the private insurance industry, created by the Terrorism Risk Insurance Act (TRIA) of 2002.

While your standard commercial property insurance policy probably excludes this coverage, under the provisions of TRIA all U.S. property and casualty insurers must make it available to consumers. It’s typically sold as an endorsement or rider.

What does terrorism insurance cover? Typical commercial terrorism insurance policies cover damage or loss of buildings, equipment, inventory and furnishings. Some policies may cover attendant business interruption losses and/or liability claims.

Each state regulates the insurance policies sold within its jurisdiction. So, depending on where you’re doing business, your terrorism insurance coverage might list specific exclusions such as fire following an attack, or cyber-attacks that don’t cause actual physical damage. You’ll need a separate cyber insurance policy for that.

If you have a terrorism insurance policy, any claim against it will have to meet certain criteria to qualify for reimbursement. That means the U.S. Department of the Treasury has to be officially declared an act of terrorism. The decision is based in part on intent of the perpetrators and the dollar amount of the aggregate damage caused.

If your business is located in a rural or primarily residential area, your risk of exposure is less than a business located in an urban center.

You can learn more about all types of small business insurance and compare coverage here.


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