Terrorism & Insurance

The devastating 9/11 terrorist attack on the World Trade Center towers, the Pentagon and Pennsylvania is one of the most costly insured catastrophe in U.S. history, closely matching the amount of damage caused by Hurricane Andrew, according to the Insurance Information Institute. It caused $18.8 billion in property losses ($24.7 billion in 2013 dollars).

Property insurance policies typically cover damage from fire, explosion, smoke, or other property or liability loss that occurs. Insurance policies do exclude war, but that is generally defined as a declared war between nations. In the aftermath of 9/11, the availability and cost of terrorism coverage has been dramatically impacted. The Terrorism Risk Insurance Act (TRIA), passed by Congress in November 2002 and renewed in 2007, provides a federal backstop for future terrorist acts, making it easier for insurers to calculate their maximum losses for such a catastrophe, and thus price the coverage.

Also impacted are commercial airline policies, personal life insurance policies, workers compensation claims and, to some limited extent, personal auto and homeowners insurance policies. Determinations of insured losses take into account the destruction of the World Trade Center towers; business and personal property of tenants and their employees; workers compensation for injured workers; claims for lost business income; and the cost of establishing alternative, temporary operations at off-site locations.

The United States government is self-insured, so physical loss to government buildings, such as the Pentagon, is not a private, commercial insurance issue. Insured commercial businesses within the Pentagon could suffer an insured loss. Life insurance policies will also be impacted.

Most Costly U.S. Terrorist Attacks

Also Visit:

• What is an insured catastrophe?
• Catastrophe Facts & Statistics
• What to Do in a Catastrophe

For more information please visit Insurance Information Institute or the National Council on Compensation Insurance (NCCI).