Should You Purchase Terrorism Insurance?

The September 11, 2001 terrorist attacks were one of the biggest tragedies in American history. That horrific incident happened over a decade ago, but most Americans are still terrified of the possibility of another terrorist attack.

Many people don’t realize that their homeowner’s insurance policy may not protect them from a possible terrorist attack. Most insurers will not cover damages caused by acts of war or nuclear attacks. Terrorist attacks are a gray area, which many insurers may try to exploit. Nobody has had to challenge an insurance company in court, so there is no precedent on whether or not your homeowner’s insurance policy will cover any damages arising from an act of terror. Some insurers have expressly excluded terrorism from their coverage.

You may be safer if you purchase a terrorism insurance policy. Here are some general guidelines that you should follow to decide whether or not you should purchase a terrorism insurance policy.

Are You a Business or Homeowner?

Congress passed the Terrorism Risk Insurance Act of 2002 shortly after 9/11. This new law was specifically designated to protect businesses in the event of a terrorist attack. However, the new law may not protect homeowners. Some experts say that the law should cover most homeowners in the event of a terrorist attack, but the laws aren’t clear on that.

Homeowners will need to be even more cautious when deciding whether or not they need additional protection from a possible terrorist attack.

Ask Your Insurer For a Clear Explanation

You will need to read through your insurance policy carefully to make sure you fully understand the terms. You will want to check with your insurer if you don’t understand the policies. Be sure to call them if you see anything in your policy that excludes coverage for damages caused by an act of war. Ask for a written statement that tells you what this means in terms of a terrorist attack.

Do a Cost-Benefit Analysis

You will need to consider both the premiums and the probability that you will be the victim of a terrorist attack. According to the Insurance Information Institute, the average cost of a terrorist insurance policy can be more than $20,000 a year. This may not be feasible for most homeowners. However, you may want to consider the policy if you are managing a large rental property and you have found that you aren’t covered by the Terrorism Risk Insurance Act.

You Will Need to Commit to It

Most companies will require you to purchase terrorism insurance when you renew your policy. You won’t be able to add it later or cancel it if you think it isn’t worthwhile anymore. Make sure you know the costs and risks before you commit to purchasing it.

Understand Your Coverage Options

Many people don’t realize that they may not be covered in the event of a terrorist attack. You should make sure that you understand what your coverage is and take the measures to make sure you are properly protected. However, you will also need to make sure you don’t pay more than it is worth.


About the Author: Adam is a safety and education writer who talks about the benefits of getting an emergency management masters and similar degrees.