Terrorism insurance is a growing need for companies today. Standard business insurance usually does not cover acts of terrorism. Businesses can often add it with a policy endorsement.
This is a type of special addition or rider to the policy. Should your business add it? Your business insurance agent can help you find out.
When Does Terrorism Coverage Apply?
Policies differ. This coverage usually allows the insurance industry and government to share some of the recovery costs. They often vary in the types of terrorist incidents they cover. There are several instances in which it might not apply. Exclusions usually include:
Cyber risk coverage varies. Usually it has coverage under a separate cyber liability policy.
What Does Terrorism Insurance Cover?
Policies differ. Commonly, they provide financial support for damaged or destroyed property. This may include buildings as well as inventory, equipment and furnishings.
Some policies also provide business interruption insurance. This helps cover your business's financial obligations while it rebuilds. It may also provide liability insurance. In this case, the liability coverage minimizes claims against your business.
When Will You File a Claim?
Terrorism insurance often applies only when the U.S. Department of Treasury certifies an event as an act of terror. That's important to know. Localized events may not qualify. Here's what else you need to know about this coverage:
The act must be violent.
An individual or a group must drive the event to coerce civilians or the government.
Losses must be at least $5 million to receive this certification.
The state may require damage to be over $100 million to qualify.
Domestic and foreign acts can fit this bill.
In this situation, contact your insurer to learn if you can file a claim. Follow their instructions to file an appropriate claim.
Do You Need It?
Many factors play a role in this:
A business located in a residential or rural area is less at risk. Businesses in commercial or high-density areas are more at risk.
Premiums are very affordable. It is generally about three to five percent of the company's property insurance cost.
Business type matters, too. Those in the energy sector are more at risk, for example.
It is not possible to know when terrorism might impact your business. Investing in low-cost terrorism insurance can be beneficial. Speak to your business insurance agent to determine how important it is to your situation.