Insurers that write monoline farm policies and incidental professional liability coverage may face additional work to clarify coverage for their insureds under the federal terrorism reinsurance program.
During a conference call, officials of the U.S. Treasury Dept., which administers the program, voiced several clarifications regarding the recent extension and modification of the U.S. Terrorism Risk Insurance Program (TRIP).
The clarifications were voiced during a conference call meeting of a terrorism working group of the National Association of Insurance Commissioners (NAIC). They came, in part, in response to questions raised by the American Association of Insurance Services (AAIS), a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty companies throughout the U.S.
Farm insurance whose premium is reported under “farm multi-peril” on insurer annual statements is no longer covered under the revised federal program. However, Treasury officials said that if premium for a farm policy is reported under a line still covered by TRIP, such as “fire” and “general liability,” that policy would still be covered under the program.
Therefore, insurers writing monoline farm policies need to know how the premium for those lines is reported, and offer federal terrorism coverage when required. Endorsements and disclosures for following the law are already available under AAIS farm and agribusiness programs.
Incidental professional liability
Treasury officials said that TRIP provides no coverage for any type of professional liability, including incidental professional liability built into or endorsed onto a policy for a line covered under TRIP. This clarification may allow insurers to “carve out” (exclude) coverage for professional liability exposures from endorsements that provide TRIP coverage.
Auto coverage under commercial umbrellas
While the revised TRIP no longer covers commercial auto as a line, Treasury officials confirmed that commercial umbrella coverage that extends to auto exposures will still fall under the program if the premium is reported as general or excess liability. No changes are required under the AAIS Commercial Umbrella Program to accommodate this clarification.
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