Tuesday, November 20, 2007

Terrorism Insurance bills look for Congressional reconciliation

It looks like Congress will find a way to compromise and pass a long-term extension to the Terrorism Risk Insurance Act of 2002. This law is a federal backstop to the insurance industry for providing terrorism insurance coverage to property.

Some of you may be saying, "Huh?" Terrorism insurance can be a very big and expensive deal if you are buying certain properties; e.g., shopping malls or high-profile properties. Think of the cost. TRIA is supposed to help lower rates on this product. On the legal and business side, if you represent a landlord or owner, you'd rather not have to provide this insurance if a lender requires it, or at least not if you cannot get it at "commercially reasonable" rates. Lesson of the day: always get your insurance people involved if you are looking at new language, coverages or any material matter regarding insurance. This is the important role that these fine professionals play.