What Is The Terrorism Risk Insurance Act (TRIA)?

What Is The Terrorism Risk Insurance Act (TRIA)?. Some loss exposures are difficult, if not impossible, to be handled by the private insurance industry.
Large exposures are considered catastrophes and involve widespread devastating loss, unpredictable occurrences and costs that can't be efficiently spread over the entire, property-owning public. Events that are considered to be catastrophic include Terrorism.
TRIA was enacted in 2002 to provide a federal level of back-up protection against certified acts of terrorism for all commercial property and casualty lines except for Workers Compensation and against certified acts of terrorism and war risks for Workers Compensation.
The covered lines of the insurance part of the TRIA were modified to cover most, but not all, commercial property and casualty lines.
So what is the Terrorism Risk Insurance Act (TRIA)? According to the US Department Of The Treasury: "The Terrorism Risk Insurance Act (TRIA) created a temporary federal program that provides for a transparent system of shared public and private compensation for certain insured losses resulting from a certified act of terrorism. The Secretary of the Treasury administers the program with the assistance of the Federal Insurance Office."
Originally, the program was set to expire in 2005. However, legislative action intervened as follows:
- On November 26, 2002, the President signed into law the Terrorism Risk Insurance Act of 2002 (Pub. L. 107–297, 116 Stat. 2322) [TRIA].
- On December 22, 2005, the President signed into law the Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109-144, 119 Stat. 2660) [TRIEA 2005]. TRIEA extended TRIP through December 31, 2007.
- On December 26, 2007, the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L. 110-160, 121 Stat. 1839) [TRIPRA 2007] which further extended TRIP through December 31, 2014.
- On January 12, 2015, the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2015 (Pub. L. 114-1, 129 Stat. 3) [2015 Reauthorization Act], which extended TRIP through December 31, 2020.
- On December 7, 2016, Treasury published an interim final rule regarding the process of certifying an act of terrorism. On December 21, 2016, an additional final rule was published as part of Treasury's implementation of changes to the Program required by TRIPRA 2015.
- On December 20, 2019, the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2019 (Pub. L. 116-94, 133 Stat. 2534) [2019 Reauthorization Act], which extended TRIP through December 31, 2027.
What is the Terrorism Risk Insurance Act (TRIA)? The Act allows the federal government to share in certain insured losses resulting from a certified act of terrorism for commercial property and casualty claims.
Below are some answers to commonly asked Terrorism Risk Insurance Act questions:
- How Does Terrorism Coverage Implementation Work?
- How Are Insureds Notified About TRIA Coverage?
- What Commercial Property And Casualty Insurance Policies Covered By TRIA?
- How Are Acts Of Terrorism Certified?
- What Is The Impact Of The Terrorism Risk Insurance Act On Insurance Agents?
How Does Terrorism Coverage Implementation Work?
So what is the Terrorism Risk Insurance Act (TRIA)? All insureds and applicants requesting eligible lines of commercial lines property and casualty coverage must be offered terrorism coverage.
An exception exists for parties who have arranged for coverage as a captive or via self-insurance. Insurers must use a disclosure form to notify its policyholders about the availability of terrorism coverage when coverage is offered and also at each renewal.
The form must offer each policyholder a chance to accept or reject the TRIA coverage. If the coverage is accepted, the policyholder must pay the appropriate charge that is determined by the applicable insurer.
How Are Insureds Notified About TRIA Coverage?

Policyholders must be given an endorsement that explains what actions are covered. They must be informed of the exact premium amount that will be charged to pay for the coverage.
The policyholder must be provided the option to accept or reject the coverage. A rejection may be in writing or it can be indicated by a refusal to pay the premium. If a claim occurs, the insurer will adjust losses using standard company procedures and then submit them to the government for reinsurance payment.
What is the Terrorism Risk Insurance Act (TRIA)? Following is an actual disclosure notice of terrorism coverage so you can see the language:
DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE
You are hereby notified that under the federal Terrorism Risk Insurance Act, as amended ("the Act"), you have a right to purchase insurance coverage for losses arising out of acts of terrorism, as defined in Section 102(1) of the Act: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury, in accordance with the provisions of the federal Terrorism Risk Insurance Act 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 the United States in the case of an air carrier or vessel 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.
YOU SHOULD KNOW THAT WHERE COVERAGE IS PROVIDED BY THIS POLICY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REIMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR COVERAGE. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE COVERAGE. GOVERNMENT REIMBURSEMENT WILL DECREASE 1% EACH YEAR STARTING JANUARY 1, 2016, UNTIL REACHING 80% ON JANUARY 1, 2020. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS THAT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT.
YOU SHOULD ALSO KNOW THAT THE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U.S. GOVERNMENT REIMBURSEMENT, AS WELL AS INSURERS' LIABILITY FOR LOSSES, RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED $100 BILLION, YOUR COVERAGE MAY BE REDUCED.
COVERAGE FOR "INSURED LOSSES" AS DEFINED IN THE ACT IS SUBJECT TO THE COVERAGE TERMS, CONDITIONS, AMOUNTS AND LIMITS IN THIS POLICY APPLICABLE TO LOSSES ARISING FROM EVENTS OTHER THAN ACTS OF TERRORISM.
YOU SHOULD KNOW THAT UNDER FEDERAL LAW, YOU ARE NOT REQUIRED TO PURCHASE COVERAGE FOR LOSSES CAUSED BY CERTIFIED ACTS OF TERRORISM.
The Act provides that a separate premium is to be charged for insurance for an "act of terrorism" covered by the Act.
Should you choose to purchase coverage for an “act of terrorism”, as defined in the Act, you must pay a premium of $100.
Note: If you do not pay the premium as noted above, you will not have Terrorism Coverage under this policy, as defined in the Act.
What Commercial Property And Casualty Insurance Policies Covered By TRIA?
Most lines of commercial property and casualty including excess, workers compensation and directors and officers liability are covered by this Act. The following are specifically excluded:
- Any type of crop or livestock insurance
- Burglary and Theft Insurance
- Commercial Auto Insurance
- Farm Owners Multiple Peril Insurance
- Financial guaranty insurance
- Flood insurance if provided by the National Flood Insurance Act of 1968
- Individual or group health and life insurance
- Medical malpractice coverage
- Private mortgage or title insurance
- Professional Liability Insurance (Directors and Officers Insurance is not considered professional liability)
- Reinsurance or retrocessional insurance
- Surety insurance
Reporting Exception
Whether coverage is really excluded depends upon how the coverage premium is reported on the annual statement lines. If a line of business is reported under the annual statement line for package premiums, then that portion of coverage is subject to reimbursement under TRIA. What is the Terrorism Risk Insurance Act (TRIA)?
For instance, if commercial auto coverage is provided in a package policy and the entire premium is reported under a package annual statement line, the auto coverage is subject to TRIA.
Similarly, theft coverage and any incidental burglary and theft that is part of a package policy is subject to TRIA provided none of the premium is reported under the Burglary and Theft annual statement line.
Professional Liability is NOT subject to the reporting exception. No matter where and how professional liability premium is reported, it is ineligible for coverage under TRIA.
Farmowners Multiple Peril is a specific line on the annual statement. Any premium reported on this line is ineligible for TRIA coverage. However, other farm coverages remain subject to TRIA provided they are not providing personal lines coverage.
How Are Acts Of Terrorism Certified?

The Secretary of the Treasury in consultation with the Department of Homeland Security and the Department of Justice is responsible for determining whether a given act is certified (therefore qualifying for coverage).
What is the Terrorism Risk Insurance Act (TRIA)? Prior to 2014 the certification required both the Secretary of State and the Secretary of Treasury to agree.
Now the decision rests entirely with the Secretary of Treasury who is required to only to consult with the other departments. As of the writing of this article, no event has been certified as a terrorist act.
The certification guidelines specify the following:
- An event must be an act of terrorism.
- The event must be violent or dangerous to human life, property or infrastructure
- The act must cause damage either within the United States or, if outside the U.S., to an air carrier or vessel or on the premises of a United States mission.
- The intent of the act must be to coerce the U.S. population or to affect the conduct of the U.S. government.
- If an act takes place and it is related to a war declared by Congress, the act may be certified for only workers compensation coverage. Further, no action is certified if the commercial property and casualty aggregate losses are less than $5,000,000.
Notes: The term air carrier is defined in section 40102 of title 49, United States code. The term vessel means a vessel sailing under the United States flag or that is based and taxed in the U.S. and subject to U.S. insurance regulations.
Example: The Boston Marathon Bombing is considered by many people to be an act of terror. However, according to the definition with TRIA and its amendments, the bombing was not certified by the Secretaries of the Treasury and State as a certified act of terrorism. The reason it was not certified was that the total aggregate covered loss was less than $5,000,000.
There is no timeline as to when the Secretary of Treasury must determine that a specific act is certified act of terror. The most recent reauthorization specifically calls for a report on how and when the certification should take place.
What Is The Impact Of The Terrorism Risk Insurance Act On Insurance Agents?
If a customer is currently written on a policy where coverage is available under TRIA, the customer must be offered terrorism coverage. However, if the coverage is not subject to TRIA, offering coverage is not required.
A company may choose to develop rates and provide coverage for lines of insurance that aren't subject to TRIA, but the coverage would not be eligible for TRIA reinsurance.
What is the Terrorism Risk Insurance Act (TRIA)? If a customer loses coverage with the renewing carrier, the carrier is required to notify the customer of the reduction of coverage. However, if an agency writes a new customer or switches an existing customer from one company to another, the agency is, generally, responsible for notifying the customer of the reduction of coverage.
What Is The Terrorism Risk Insurance Act (TRIA)? - The Bottom Line
The goal of Congress is to eventually eliminate this program once the private insurance market has had sufficient time to properly evaluate the exposure. To this end, a mandatory collection of data is being required.
TRIA purchases must be collected and include information regarding geographic locations where the coverage is purchased, the percentage of offers being accepted and terrorism reinsurance purchases that are finalized.
More Helpful Commercial Insurance Articles
Read other informative articles on small business commercial insurance including costs and coverages.
- Amazon Insurance Accelerator
- Best Business Insurance
- Black Owned Business Insurance
- CGL Policy Coverage
- Cheap Small Business Insurance
- Commercial Auto Liability
- Commercial General Liability Insurance
- Commercial Insurance Brokers
- Commercial Insurance Premium Financing
- Commercial Insurance Prospecting Letters
- Commercial Insurance Quotes
- Commercial Liability Insurance Quotes
- Commercial Property Insurance Policy Coverage Forms
- COVID-19 Small Business Insurance Survival Guide
- Cryptocurrency Insurance
- Directors and Officers Liability
- Do I Need Insurance As A Subcontractor?
- Does Business Insurance Cover Riots And Looting?
- Does Business Interruption Insurance Cover COVID-19 Coronavirus?
- Does My Business Need Commercial Flood Insurance?
- Fire Legal Liability Insurance
- General Liability Class Codes For Commercial Insurance
- General Liability Insurance Cost
- General Liability Insurance Coverage
- General Liability Insurance FAQ
- How Does General Liability Insurance Work?
- How Has COVID-19 Coronavirus Affected The Commercial Insurance Industry?
- How Is ChatGPT Used In The Commercial Insurance Industry?
- How Much Does General Liability Insurance Cost?
- How Much Does Workers Compensation Insurance Cost?
- How Much Is Insurance For Contractors?
- How To Comapre Small Business Insurance Policies
- How Will The Metaverse Change Commercial Insurance?
- How Will Artificial Intelligence Change Commercial Insurance?
- Liability Insurance Quotes
- Liability Insurance
- NAICS Codes For Commercial Insurance
- Next Insurance Policy For Small Business
- Non-Fungible Tokens Insurance
- Non-Owned Hired Auto Liability
- Premises Liability
- Public Liability
- Riot, Vandalism And Civil Commotion Insurance
- SIC Codes For Commercial Insurance
- Special Purpose Acquisition Company Insurance
- The Role Of Insurance In Risk Management
- Understanding Primary And Non-Contributory Liability Insurance
- What Are The Different Types Of Insurers?
- What Does Commercial Auto Physical Damage Insurance Cover?
- What Does It Mean To Be An Additional Insured?
- What Does Negligence Mean In Insurance?
- What Is A Captive Insurance Company?
- What Is A Waiver Of Subrogation?
- What Is An Additional Insured Endorsement?
- What Is Business Interruption Insurance?
- What Is Excess And Surplus Lines Insurance?
- What Is General Liability Insurance?
- What Is Risk Management?
- What Is The Impact Of Inflation On The Commercial Insurance Market?
- What Is The Terrorism Risk Insurance Act (TRIA)?
- Who Is An Insured Under A CGL Policy?
- Women Owned Business Insurance
- Workers Compensation Class Codes Lookup
- Wrap-Up Insurance Programs (OCIP and CCIP)

Business insurance articles are helpful for a number of reasons. First and foremost, they provide information about the various types of insurance available for businesses. This can help business owners make informed decisions about which insurance policies are best for their needs.
Additionally, business insurance articles can help business owners understand the importance of having insurance. Many business owners may not realize the risks they are exposed to, and insurance articles can highlight the potential consequences of not having the proper coverage.
Furthermore, business insurance articles can help business owners stay informed about changes in the insurance industry. This includes changes in laws and regulations, as well as updates on the various insurance policies available. This can help business owners stay on top of their insurance needs and make sure they have the coverage they need.
In summary, business insurance articles are helpful because they provide information about the types of insurance available, highlight the importance of having insurance, and keep business owners informed about changes in the industry.