The American Association of Insurance Services (AAIS) has prepared a table that lists in simplified fashion how its latest terrorism endorsements apply to certain categories of terrorism losses.
Since enactment of a new federal terrorism reinsurance program in 2002, AAIS has been developing or revising policy forms and rating information for endorsements addressing terrorism losses.
As is the case for all new property/casualty terrorism endorsements, insurance practitioners need to know four things concerning each AAIS endorsement:
*How an endorsement applies to losses arising from “certified” acts of terrorism, which are covered under the new federal program. (Certification is restricted to events inspired, directed, or carried out by foreigners that cause more than $5 million in damages.);
*How an endorsement applies to direct fire losses resulting from certified terrorist acts in “Standard Fire Policy” states. (These states require property insurers to cover “fire following” losses, even when coverage for the event causing the fire is excluded.);
*How an endorsement applies to losses arising from “non-certified” acts of terrorism. (Non-certified terrorist acts are, by definition, all those that are not certified for coverage under the federal program, and include all acts of domestic terrorism.);
*How an endorsement applies to direct fire losses resulting from non-certified terrorist acts in “Standard Fire Policy” states.
The AAIS table, prepared by Robert Prahl, director of education, lists all new terrorism endorsements developed and filed for 12 AAIS commercial lines and farm programs.
For each endorsement, readers can see whether it excludes or grants coverage for each of the four categories listed above, whether coverage is limited for a certain category, and what must be done to clarify a policy.
To see a copy of the table, go to www.AAISonline.com, click on the icon for “Terrorism: The New Rules,” and follow the links.
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