Insurance Center

Our world has changed, nit for the better this time. Now terrorism is a household item just like burglary or fire.

Workers compensation and other coverages
Workers compensation, a compulsory line of insurance for all businesses, covers employees injured or killed on the job and therefore automatically includes coverage for acts of terrorism. Workers compensation is also the only line of insurance that does not exclude coverage for acts of war. Coverage for terrorist acts cannot be excluded from workers compensation policies in any state.

There are essentially three types of workers compensation benefits.
o The first reimburses workers for lost wages while they recover from their injuries.
o The second covers workers for all medical expenses incurred as a result of the injuries they sustain.
o The third type of benefit provides payments to the families of workers killed on the job.

Life/health and disability insurance policies may provide coverage for loss of life, injury or sickness to individuals in the event of a terrorist attack.

What is the Terrorism Risk Insurance Act (TRIA)?
TRIA is a public/private risk-sharing partnership between the federal government and the insurance industry. The program is designed to ensure that adequate resources are available for businesses to recover and rebuild if they become the victims of a terrorist attack.

Specific provisions of the legislation are:
An event must cause at least $5 million in aggregate property and casualty insurance losses to be certified by the Secretary of the Treasury as an act of terrorism.

The bill is limited to international terrorism committed on behalf of any foreign person or foreign interest on U.S. soil. (Damage to an air carrier or vessel outside the U.S., or to a the premises of a U.S. mission is covered by TRIA, however)

Each participating insurer is responsible for paying out a certain amount in claims – a deductible -- before Federal assistance becomes available.

For losses above a company’s deductible, the federal government will cover 90 percent, while the insurer contributes 10 percent.

The aggregate insurance industry retention in 2004 is $12.5 billion in 2004 and $15 billion in 2005.

Losses covered by the program are capped at $100 billion.

Lines excluded from the program are: personal lines (auto and home), assumed reinsurance, federal crop, mortgage guaranty, financial guaranty, medical malpractice, flood insurance and life & health.

The Act sunsets after three years on December 31, 2005.