Will The Terrorism Risk Insurance Act of 2002 Be Extended?

The Terrorism Risk Insurance Act (TRIA) is a United States federal law signed into law by President George Bush on November 26, 2002. The Act created a federal "backstop" for insurance claims related to acts of terrorism. The Act "provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism." The Act was originally set to expire December 31, 2005, was extended for two years in December 2005, and was extended again on December 26, 2007. The current law, under the Terrorism Risk Insurance Program Reauthorization Act, is set to expire on December 31, 2014.

H.R. 508 (Terrorism Risk Insurance Act of 2002 Reauthorization Act of 2013) was assigned to a congressional committee on February 5, 2013, which will consider it before possibly sending it on to the House or Senate as a whole.  At the time it was submitted the bill was given a 25% chance of making it out of committee and less than a 10% chance of being passed.  It was thought that the Terrorism Risk Insurance Act would fade out of existence.

With the Boston Marathon bombing on April 15th the interest in insurance coverage related to this type of act has taken on a completely new perspective.

However it is not clear that the Boston Marathon bombing will be covered under the current act.  President Obama on Tuesday defined instances where “bombs are used to target innocent civilians” as acts of terror – which includes the Boston Marathon bombing.

“Any event with multiple explosive devices – as this appears to be – is clearly an act of terror,” a White House official told reports after the bombing.

But in order for damaged businesses to benefit from the federal reinsurance program, an attack must be certified as an “act of terrorism” by Secretary of the Treasury Jack Lew, as well as the US Attorney General and the Secretary of State, the Wall Street Journal reports.

And in order for these department heads to certify a violent act as “terrorism”, there needs to be a minimum of $5 million in inflicted damages – regardless of the motives behind the attack. About 60 percent of commercial policyholders have purchased insurance against terrorist attacks – an investment that likely won’t help businesses damaged in the Boston Marathon attack, considering the small amount of damage in comparison to other attacks, like 9/11.

Do you know what your business interruption insurance covers?

When considering your needs for insurance products for your home or business remember contacting Bennett Insurance Group is the right move.  Give us a call at 623-979-4140

Presented By:
Jim Bennett
Bennett Insurance Group, Inc.
623-979-4140
http://jimbennettinsurance.com
jim@jimbennettinsurance.com