New Year's Restitutions (Insurance)

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Stand By For An Urgent Letter -- From Your Insurer...

This week, many aircraft owners will be receiving letters from their insurers offering something new: TRIA. For those not intimate with insurance acronyms, this one refers to the Terrorism Risk Insurance Act of 2002, passed by congress in November. In a nutshell, it gives you the right to purchase coverage to protect your airplane against acts of terrorism, with Uncle Sam footing part of the bill. But there's a catch. While the government will help insurers make good on damage claims related to terrorism, the TRIA law allows the treasury department to define exactly what constitutes an act of terrorism. Specifically, says TRIA, it's "a violent act that is dangerous to human life, property or infrastructure ... to have resulted in damage within the U.S. or outside the U.S. in the case of an air carrier ... or a U.S. registered or U.S. flag vessel or the premises of a U.S. mission." Further, the damage must have been caused by "an individual or individuals acting on behalf of any foreign person or foreign interest ... as part of an effort to coerce the civilian population of the U.S. ... to influence policy or affect the conduct of the U.S. government by coercion."

Insurance companies are telling their customers they have 30 days to decide on TRIA coverage -- prices for this add-on provision vary by company. Since there's no history of terrorism-related payouts, insurers are taking a shot in the dark on premiums. USAIG, for instance, is charging $.05 per $100 of policy limit per aircraft for physical damage and $50 per $1 million of coverage for liability. If you already have war-risk coverage on your policy (some policies have this, some don't) the additional TRIA coverage cost may be waived. Contact your insurance broker for more specific information on your policy. However, you will have to respond yea or nay on TRIA within 30 days of receiving the letter.

NOTE: The full text of TRIA can be found at http://thomas.loc.gov.  Search for the phrase "terrorist risk insurance act."