Does Your Homeowners Insurance Cover Terrorist Attacks?

terrorist attacks

The United States has always faced the risk of terrorist attacks, which is why our military places so much emphasis on protecting our land. As seen in the Oklahoma City bombing, 9/11 attacks and most recent Boston Marathon bombing, however, it’s always possible for a threat to manifest into a real attack.

Most people who are concerned about terrorism worry about the risks their families face, but another worry is how their homes could be impacted by an attack. Would homeowners insurance cover losses?

The Impact of Terrorist Attacks on Property/Casualty Insurers

When we remember the tragedy of any domestic or foreign terrorist attack, we rightfully think of those who died. From the 168 killed in Oklahoma City to the thousands killed on September 11, 2001, the true tragedy is the lives lost.

Usually placed on the back-burner is the financial cost of such disasters, particularly those incurred by property or casualty insurers and reinsurers.

The Oklahoma City bombing of 1995 reportedly destroyed or damaged hundreds of buildings and dozens of cars. The financial loss associated with damage was estimated at more than $100 million.

The 9/11 terrorist attacks had an even greater financial impact on the insurance industry. The Insurance Information Institute reports that insured losses from the attacks reached $32.5 billion, making it the second highest event resulting in U.S. insurance losses, just behind Hurricane Katrina.

Since terrorism is always a threat, it’s important for families to prepare for the possibility of an attack. In addition to creating a survival plan, families should have insight into how their homes will be financial protected following an attack.

Terrorist Attacks and Your Homeowners Insurance Policy

The Terrorism Risk Insurance Act of 2002 was adopted by Congress to ensure there would be widespread availability of property and casualty insurance for terrorism risk. However, it’s important to note that this act did not cover what is known as “personal lines” insurance — or insurance for individuals and families.

This doesn’t mean, however, that you can’t receive help in the event of a terrorist attack. Since most standard homeowners insurance policies do not have exclusions for losses for most terrorist attacks, if your home burns down as a result of a terrorist explosion, you’re likely covered.

The best way to find out how you will be impacted by a terrorist attack is to read your policy, and if you still have questions, contact your insurance company.

If for some reason you find a terrorist exclusion in your homeowners insurance policy, inquire about some form of additional coverage that could financially protect you in case your home is damaged in one of these tragic events.

Image: eschipul