COVERAGE BRIEF: TERRORISM INSURANCE
Office of Management and Finance - BIBS
Acts of terrorism are divided into two categories by the insurance industry:
- Eligible for coverage under the Federal Terrorism Risk Insurance Act (TRIA)
- Act is certified by the Secretary of the Treasury after meeting all of the criteria below:
- Be a violent act or an act dangerous to human life, property, or infrastructure.
- Cause damage within the U.S.or area of U.S. Sovereignty (e.g. embassy, ship).
- Be committed by someone acting on behalf of a foreign person or foreign interest, as part of an effort to coerce the civilian population of the U.S.or to influence the policy or affect the conduct of the U.S. Government by coercion.
- Produce property and casualty losses in excess of $5 million.
- Insurers paying claims in response to certified acts of terrorism qualify for federal reimbursement.
- All domestic acts of terrorism
- All other acts of terrorism not meeting all of the criteria for a certified act.
THE CITY’S CURRENT COVERAGE FOR ACTS OF TERRORISM
City Risk purchases a Property Policy for:
- City-owned buildings and contents;
- City-owned contents at leased locations; and,
- Leased structures where property coverage is required in the lease.
- Replacement value - cost to replace with a like structure.
- Mitigation expenses - things the City does to prevent further loss.
- Debris removal – cost to clean-up the damaged area.
- Loss of income (limited) – uncollectable fees or revenue due to the property loss.
- Unimproved property;
- Infrastructure such as, water mains, sewers, streets, and sidewalks.
Limits of Coverage - The most the Policy will pay:
$500 Million aggregate per policy year (same as fiscal year) for both:
- Certified or
Deductible - What the City must pay:
$100,000 for each Occurrence whether:
- Certified or
Major Exclusions to Coverage – Non-Certified:
- Pathogenic or poisonous biological or chemical materials
- Action taken to prevent, defend against, respond to or retaliate against terrorism.
City Risk purchases a separate Fine Arts Policy for:
- All risks, the policy does not specifically exclude coverage for loss or damage caused by terrorism.
- $10 Million limits of coverage in any one loss or disaster.
- $1,000 deductible for each claim of loss or damage separately occurring.
The City self-insures Tort Liability up to $1 million per Occurrence
The City may have some exposure to tort liability claims as a result of terrorism; for bodily injury or property damage caused by the
City’s negligence, for example:
- Failure to act on warnings about planned attacks.
- Lack of contingency planning resulting in longer than necessary delays in providing water and sewage services if facilities are damaged/or destroyed.
The City purchases an Excess Policy to cover claims over $1 Million
Total limits of coverage $10 Million in excess of $1 Million retained limit.
Excess Liability Policies specifically include coverage for certified acts of terrorism and do not exclude coverage for all other terrorism.
Includes coverage for legal expenses, both internal by the City Attorney’s Office and outside legal firms.
The City self-insures Workers’ Compensation up to $850,000 per incident
The City self-administers it’s Workers’ Comp program in compliance with State laws and regulations.
- Employee injuries that resulted from a terrorist attack would be covered as defined by the State’s Workers’ Compensation regulations (ORS 656.)
The City purchases an Excess Policy to cover claims over $850,000
- Coverage is provided up to Statutory Limits.
- Coverage provided if loss is determined compensable by State laws and regulations.