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The federal Terrorism Risk Insurance Act (the “Act”), as amended, establishes a temporary federal program (the “Program”) providing for a system of shared public and private compensation for certain insured commercial property and casualty losses resulting from “acts of terrorism.”

The Act defines an “act of terrorism” as an act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State, and the Attorney General of the United States, to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property, or infrastructure; to have resulted in damage within the United States, or outside of the United States in the case of certain air carriers or vessels or the premises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion.

Insured losses caused by “acts of terrorism” to which the Program applies would be partially reimbursed by the U.S. Government under a formula established by the Act. Under that formula, the U.S. Government pays 85 percent of covered terrorism losses exceeding the statutorily established deductible paid by the insurance company providing the coverage.

Note that the Act contains a $100 billion cap that limits U.S. Government reimbursement as well as insurers’ liability for losses resulting from “acts of terrorism” to which the Program applies when the amount of such losses in any one calendar year exceeds $100 billion. If the aggregate insured losses for all insurers exceeds $100 billion, coverage may be reduced to the extent permitted by the Act or any regulations promulgated thereunder.

Contact your insurance provider to determine whether your insurance coverage includes coverage for losses by “acts of terrorism” to which the Program applies.


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