The Terrorism Risk Insurance Program Reauthorization Act, commonly called TRIPRA, requires insurers to offer terrorism coverage on most commercial property and casualty policies and provides a federal backstop that shares losses with insurers after a certified attack. TRIPRA coverage reaches a defined set of commercial lines, leaves personal insurance and several commercial lines out entirely, allows insurers to exclude nuclear, biological, chemical, and radiological events, and caps combined federal and insurer payments at $100 billion in any single year.1U.S. Department of the Treasury. Terrorism Risk Insurance Program The current authorization runs through December 31, 2027.
Coverage Starts With Certification
Nothing under the program pays out until the Secretary of the Treasury formally certifies an event as an act of terrorism, in concurrence with the Attorney General and the Secretary of Homeland Security.2Congress.gov. H.R.26 – Terrorism Risk Insurance Program Reauthorization Act of 2015 All three officials must agree.
The event has to be a violent act dangerous to human life, property, or infrastructure, committed inside the United States or involving a U.S. air carrier or vessel abroad, and intended to coerce civilians or influence government policy through intimidation or destruction. The original 2002 law required a foreign nexus, but the 2007 reauthorization removed that requirement, so domestic terrorism now qualifies.3Congress.gov. Terrorism Risk Insurance – Overview and Issue Analysis Aggregate property and casualty losses from the event must exceed $5 million for certification to be possible.
Commercial Lines That Fall Within the Program
Every insurer writing eligible commercial property and casualty coverage must offer terrorism coverage on terms that do not differ materially from the terms applied to non-terrorism losses. The insurer has to disclose the specific premium charged for the terrorism portion and the federal share of compensation that would apply.4U.S. Department of the Treasury. Treasury Announces Decision to Extend the Make Available Provisions of the Terrorism Risk Insurance Act into 2005 A business cannot be offered terrorism coverage with narrower terms or lower sublimits than what applies to fire, wind, or other covered perils.
Program-eligible lines include:5Department of the Treasury. TRIP 02 A Schedule A Instructions
- Commercial property: fire, allied lines, commercial multiple peril, inland marine, ocean marine, and boiler and machinery
- Commercial liability: general liability, products liability, and aircraft liability
- Workers’ compensation
- Directors and officers liability
- Excess insurance layered above primary commercial policies
What the Program Does Not Cover
Personal lines sit outside the program entirely. Homeowners and personal auto policies carry no federal backstop. On the commercial side, several lines are also excluded:6Federal Register. Terrorism Risk Insurance Program – TRIA Extension Act Implementation
- Medical malpractice
- Professional liability for accountants, lawyers, architects, and other professionals (directors and officers liability is separately included)
- Commercial auto, liability and physical damage
- Federal crop insurance and private crop or livestock insurance
- Private mortgage insurance and title insurance
- Financial guaranty insurance
- Health and life insurance
- Flood insurance and earthquake insurance
- Reinsurance
- Surety and burglary/theft insurance
- Farmowners multiple peril insurance
The professional liability exclusion catches some businesses off guard. An architecture firm might assume its errors and omissions policy carries terrorism protection through the program. It does not. Only the firm’s commercial property, general liability, workers’ compensation, and other program-eligible policies draw on the backstop.
The NBCR Gap in Your Policy
The federal program itself covers all losses from a certified attack, including nuclear, biological, chemical, or radiological events. Individual insurers, however, are free to write NBCR exclusions into their commercial policies, and many do.7U.S. Government Accountability Office. Terrorism Insurance – Status of Coverage Availability for Attacks The backstop only reimburses insurers for losses they are contractually obligated to pay, so if the policy excludes an NBCR event, the insurer owes nothing and the federal share never flows.
A terrorism endorsement by itself does not close this gap. Check whether the endorsement specifically includes or excludes NBCR perils. The policy language controls, regardless of what the federal program itself would otherwise cover.
Why Workers’ Compensation Is Different
A business can decline the terrorism endorsement on its property or liability policies. Workers’ compensation does not work that way. State law generally prohibits exclusions in workers’ compensation, so terrorism coverage is effectively mandatory on that line.
If an employee is injured in a certified attack while on the job, the workers’ compensation policy pays regardless of whether the employer separately purchased terrorism coverage elsewhere.
What Happens If You Decline
Policyholders are not required to buy the terrorism coverage the insurer must offer. If you decline, the insurer may add a terrorism exclusion to the policy, which means a certified attack would trigger no payment under that policy.3Congress.gov. Terrorism Risk Insurance – Overview and Issue Analysis The federal backstop sits behind the insurer’s obligation, not the business’s loss, so declining the coverage leaves your business absorbing the full loss from a certified event. Workers’ compensation remains the exception.
How Losses Are Shared and the $100 Billion Cap
The backstop does not activate for every certified attack. Industry-wide insured losses must first exceed a $200 million program trigger.8U.S. Department of the Treasury. Report on the Effectiveness of the Terrorism Risk Insurance Program Below that threshold, insurers pay all claims from their own reserves.
Once losses clear $200 million, each insurer absorbs a deductible equal to 20% of its direct earned premiums from the prior calendar year on program-eligible lines. The federal government then covers 80% of the insurer’s losses above that deductible, and the insurer pays the remaining 20%.9EveryCRSReport.com. The Reauthorization of the Terrorism Risk Insurance Act of 2002
An absolute ceiling applies above all of this. Combined payments from the federal government and private insurers cannot exceed $100 billion in a single calendar year.10U.S. Government Publishing Office. H.R. 2761 – Terrorism Risk Insurance Program Reauthorization Act of 2007 – Section: Annual Liability Cap If losses from a certified attack exceed $100 billion, the federal government is not obligated to pay more, and insurers that have already met their deductible and co-share are not required to pay further claims. Any resolution for losses above the cap would require separate action from Congress. Insurers must disclose the cap to policyholders at the time of offer, purchase, and renewal.
Recoupment Surcharges After an Attack
Federal payments under the backstop are not a pure outlay. The government has mechanisms to recover money from the insurance industry, and that cost flows through to policyholders as surcharges on future commercial premiums.11U.S. Government Accountability Office. Terrorism Risk Insurance – Program Changes Have Reduced Federal Fiscal Exposure
Mandatory recoupment applies when aggregate insurer deductibles and co-shares fall below a prescribed figure called the marketplace aggregate retention amount. Insurers impose a surcharge on all program-eligible commercial policies until total collections reach 140% of the mandatory recoupment amount. Treasury may also use discretionary recoupment when the federal share exceeds the retention amount, but the surcharge for discretionary recoupment cannot raise program-eligible premiums by more than 3% in any calendar year. For 2026, the marketplace aggregate retention amount is $2 billion.12Federal Register. IMARA Calculation for Calendar Year 2026 Under the Terrorism Risk Insurance Program
The practical consequence reaches further than the businesses that bought the coverage. After a federal payout, every business with a program-eligible commercial policy, including those that declined the terrorism endorsement, can see a surcharge on future premiums while the government recovers its outlay.
The 2027 Expiration
The current authorization runs through December 31, 2027.1U.S. Department of the Treasury. Terrorism Risk Insurance Program Congress has reauthorized the program four times, in 2005, 2007, 2015, and 2019, each time adjusting the balance of risk between the government and private insurers. Whether and how Congress reauthorizes the program after 2027 will shape what terrorism coverage looks like, and what it costs, on commercial policies going forward.