Examining the benefits of standalone terrorism coverage

Acts of terrorism are no longer isolated to major cities, says EVP

Examining the benefits of standalone terrorism coverage

Insurance News

By Bethan Moorcraft

Eight people were killed and 12 badly injured in New York City just over a week ago when a suspected terrorist drove a truck into a cycle path.

Sayfullo Saipov, aged 29, was shot by police at the scene, taken to hospital and has now been charged with terrorism offences. The Uzbekistan native told authorities his actions were inspired by IS.

This civilian-focused vehicle ram attack is the latest in a string of copycat incidents to have taken place across Europe and North America. Terrorism events are not limited to large cities. They can happen anywhere and involve the most unlikely of terror-inciting methods.

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Acts of terrorism, like any other sudden and unforeseen perils, can be covered by insurance. The Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) requires all US-domiciled captive insurers to offer terrorism insurance adhering to TRIPRA’s strict structures, requirements and triggers. There are also companies, such as Global Excess Partners, offering standalone terrorism insurance products in lieu of TRIPRA coverage.

“It’s important for insurance brokers to understand that acts of terrorism are not isolated to major metropolitan areas and large trophy properties. An event can occur anywhere and affect anyone,” said Timothy J. Guiltinan, executive vice president, Global Excess Partners – a subsidiary of H.W. Kaufman Group.

“Terrorism is a peril we all need to be aware of and our insureds need to be protected against potential property damage or business interruption claims. An educated broker offering corporate solutions should certainly be discussing the benefits of standalone terrorism coverage with their clients.”

Business interruption coverage is a key area of consideration within a terrorism insurance policy. However, it can be difficult to process a business interruption claim through TRIPRA because the $5 million damage certification threshold required to trigger the coverage is hardly ever met. 

After the Boston Marathon bombing in 2013, several businesses were interrupted due to the police investigation. However, the event was not certified because the losses did not trigger the TRIPRA threshold, therefore any businesses relying on TRIPRA coverage struggled with their claims. A standalone terrorism insurance policy doesn’t require the same process of certification and should cover all terrorism-related losses, according to Guiltinan.

“If a client is looking to protect property for either physical damage or business interruption, the most efficient and holistic coverage would come with a standalone terrorism product,” Guiltinan told Insurance Business.

“Standalone terrorism coverage works particularly well for smaller companies because there’s a much lower risk threshold. You can now buy very low deductibles – as low as zero on some standalone products.”


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