Changes in the Terrorism Risk Insurance Act May Cost you Thousands in Fines

Jan 13, 2015 | by Franck Cushner, CFP®

As I made my way in to the office this morning, I opened a letter from my insurance company, informing me that my business liability policy is being cancelled. After some digging, I found an article explaining why this was happening.

Due to congress failing to do their job, the federal Terrorism Risk Insurance Act expired, which has prompted insurance companies in NYC to cancel policies. The act allowed insurance companies to offer terrorism coverage with certain comfort. Under the act, the federal government acted as a reinsurer in the event of a major terrorist attack. With this reinsurance gone, insurance companies, including The Hartford, have begun to cancel policies. The explanation I was given was that New York City does not meet the terrorism guidelines.

This will undoubtedly have severe repercussions in the small business community. Small business owners who do not pay attention to this change may be fined severely. As per New York State’s Workers Compensation Boards website:

"Section 26-a says an employer is liable for a penalty of $2,000 per 10-day period of noncompliance, plus the actual award (including both compensation and medical costs), plus any other penalties the Board assesses for noncompliance."

What does workers compensation have to do with it? New York State requires workers comp and disability. It also REQUIRES, by law, injury by terrorism coverage, which is part of my business policy.

Call your insurance broker today to be sure you are not at risk!

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