Terrorism Coverage

What You Need to Know

Following the September 11, 2001 attacks, most commercial insurance policies began excluding terrorism, but the Terrorism Risk Insurance Act (TRIA) created a federal backstop program that allows insurers to offer terrorism coverage with government support. The coverage typically requires the act to be "certified" as terrorism by federal authorities, and it protects against both direct damage to your property and collateral damage from nearby attacks, plus business interruption losses.

Higher-risk locations include:

• Major metropolitan areas and financial districts
• Near high-profile landmarks or tourist attractions
• Transportation hubs like airports, train stations, or bus terminals
• Near government buildings or military installations

Why It Matters for Restaurant Owners

While terrorism may seem like a remote risk for most restaurants, the 9/11 attacks demonstrated that even establishments far from the direct target can suffer devastating property damage and business interruption. After 9/11, many restaurants in lower Manhattan were closed for months due to restricted access, loss of power and utilities, and loss of customer traffic.

The annual premium for terrorism coverage is typically modest, often just a few hundred dollars for coverage worth hundreds of thousands, making it cost-effective protection against a potentially catastrophic but low-probability event. Review your commercial property policy to see whether terrorism coverage is included or excluded, and make an informed decision based on your location and risk tolerance.