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Questions and Answers

What defines an act of terrorism under the Terrorism Risk Insurance Act?

It must be carried out by organized criminal groups.

It can involve domestic individuals but must target foreign interests.

It must be certified by the Secretary of the Treasury. (correct)

It must only involve a loss of over $1 million.

What significant change was made in the 2007 re-authorization of the Terrorism Risk Insurance Act?

The requirement of a minimum loss amount was increased to $10 million.

Insurance coverage for terrorism is no longer offered.

The act can now be certified even if committed by U.S. citizens. (correct)

Acts must now be committed exclusively by foreign terrorists.

What is the primary purpose of the Terrorism Risk Insurance Act?

To share the risk of loss from terrorism between the federal government and the insurance industry. (correct)

To impose restrictions on how insurance companies operate.

To completely eliminate risks associated with terrorism.

To provide insurance without any governmental involvement.

How does the notice clarify the relationship between the notice and the policy?

The policy provisions apply in case of any conflict with the notice. Signup and view all the answers

What event must occur for a terrorism act to be certified under the federal program?

It must be acknowledged by the Secretary of the Treasury. Signup and view all the answers

What percentage of terrorism losses is the federal government responsible for in 2015, provided the losses exceed the applicable insurer retention?

85% Signup and view all the answers

What happens if the aggregate insured losses from certified terrorist acts exceed $100 billion in a calendar year?

The Treasury will not pay beyond $100 billion Signup and view all the answers

How will the federal government's share of losses change after 2015?

Decrease by 1 percentage point each year Signup and view all the answers

Which provision still applies if an act of terrorism occurs?

Nuclear war exclusions Signup and view all the answers

What must an insurer meet to be liable for losses from certified terrorist acts under federal law?

Insurer deductible under the Act Signup and view all the answers

What is required for an act of terrorism to be considered certified under the federal program?

Meeting specific criteria established by law Signup and view all the answers

Which document confirms that coverage for certified acts of terrorism has been accepted?

Policyholder Notice Signup and view all the answers

Who has the authority to cancel the policy?

Only the first Named Insured shown in the Declarations Signup and view all the answers

How many days notice must be provided if the policy is canceled for nonpayment of premium?

10 days before cancellation Signup and view all the answers

What limitation does the company set concerning inspections?

They are not obligated to make any inspections Signup and view all the answers

What is the purpose of the actions the company may undertake regarding reports or recommendations?

To relate only to insurability and premiums Signup and view all the answers

In what scenario must the company provide 30 days notice of cancellation?

For any other reason not related to nonpayment Signup and view all the answers

Which statement accurately reflects the company's stance on safety?

They do not warrant that conditions are safe or healthful Signup and view all the answers

What type of notice must be given to the first Named Insured when the company cancels the policy?

Written notice Signup and view all the answers

What is the primary reason for the company conducting any inspections or surveys?

To evaluate insurability Signup and view all the answers

To whom does the company send the cancellation notice?

To the last known address of the Named Insured Signup and view all the answers

What will be the nature of the refund if the insurance policy is canceled by the insurer?

Refund will be pro rata. Signup and view all the answers

Who is authorized to make changes to the terms of the policy?

The first Named Insured with consent. Signup and view all the answers

What is required for a notice of cancellation to be considered valid?

Proof of mailing. Signup and view all the answers

What happens to the rights and duties under the policy in case of the Named Insured's death?

They are transferred to the legal representative. Signup and view all the answers

What is the responsibility of the first Named Insured regarding premium payments?

They are responsible for the payment of all premiums. Signup and view all the answers

What is the policy on transferring rights and duties under the insurance policy?

Written consent is required, except in case of death. Signup and view all the answers

What is the maximum time period during which the insurer may examine and audit the insured's books and records?

For three years after the policy period. Signup and view all the answers

What will happen if the first Named Insured cancels the policy?

They will receive a refund that may be less than pro rata. Signup and view all the answers

Which of the following statements is accurate regarding the policy's amendments or waivers?

They can only be made by endorsement issued by the insurer. Signup and view all the answers

Study Notes

Policyholder Notice - Terrorism Coverage

This notice does not form part of the policy, grant coverage, or change any policy terms.
"We" refers to the insurer; "you" refers to the policyholder.
Policyholders have a right to purchase terrorism coverage subject to all policy provisions.
A federal program within the Department of Treasury shares terrorism loss risk with the insurance industry.
The definition of a Certified Act of Terrorism has changed since 2007. This no longer requires the act to be committed by a foreign interest.
The 2015 federal share is 85% of losses exceeding the insurer retention and this percentage decreases to 80% over time.
If insured losses exceed $100 billion in a calendar year, the Treasury will not pay any amount in excess of $100 billion.
There is a limit on liability for payment of insured losses exceeding $100 billion in a calendar year.

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Description

Test your knowledge on the Terrorism Risk Insurance Act, focusing on its definitions, key provisions, and significant changes made during its 2007 re-authorization. This quiz covers aspects like government responsibility for losses, certification of acts of terrorism, and insurer requirements under federal law.