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Difficulty: EasyTerrorism Risk Insurance Act (TRIA)

A commercial property owner is reviewing a policy renewal with their insurance broker. The broker provides a formal disclosure offering terrorism coverage under the Terrorism Risk Insurance Act (TRIA) for a stated premium. What is the property owner's obligation regarding this specific terrorism coverage?

  1. A
    The property owner must accept the coverage, as TRIA mandates terrorism insurance for all commercial properties.
  2. The property owner may voluntarily accept or reject the terrorism coverage.Answer
  3. C
    The property owner must purchase this coverage directly from the federal government instead of the primary insurer.
  4. D
    The property owner can only decline the coverage if they obtain an official waiver from the Department of Insurance.

Answer

The property owner may voluntarily accept or reject the terrorism coverage.
Under TRIA, the requirement to 'make available' terrorism coverage applies to the insurer. The commercial property owner is simply the consumer receiving the offer and has the right to voluntarily accept or reject the coverage based on their own risk management decisions.

Step-by-Step Solution

1
Identify the TRIA requirement for insurers.
TRIA requires commercial property and casualty insurers to 'make available' (offer) coverage for certified acts of terrorism.
This establishes the insurer's legal obligation to present the coverage option to the commercial client.
2
Determine the insured's obligation regarding the mandatory offer.
The insured has the right to voluntarily accept the coverage and pay the premium, or reject it entirely.
TRIA does not mandate that consumers must purchase terrorism coverage; it only ensures they have the opportunity to do so.

Key Concept

TRIA Mandatory Offer Requirement vs. Voluntary Acceptance
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Topics

Terrorism Risk Insurance Act (TRIA)

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