For most businesses it’s a choice, not a requirement. Federal law makes insurers offer terrorism coverage on eligible commercial property and casualty policies, and you can accept it or decline it. On the NAIC model form, declining means signing that you understand you will have no coverage for losses from acts the Treasury certifies as terrorism. It stops being optional in two places: workers’ comp, which state law requires to cover terrorism, and loans whose lender requires it, such as Fannie Mae multifamily loans. If your property is seen as a likely target, or the coverage on your property policy is too narrow, a standalone terrorism policy is the other route. Read your loan documents before you sign the decline line.
What the law makes insurers do
The Terrorism Risk Insurance Act created the Terrorism Risk Insurance Program, a temporary federal program run by the Treasury Department with the Federal Insurance Office. Under 31 CFR 50.20, an insurer must make terrorism coverage available in all of its property and casualty policies, on terms, amounts and limits that don’t differ materially from the coverage for other causes of loss. The offer comes with the initial offer of a policy and the initial offer of each renewal.
The rule covers commercial lines: fire and allied lines, commercial multiple peril (the package policy), ocean and inland marine, workers’ comp, other liability, products liability, aircraft, and boiler and machinery. The regulation leaves out commercial auto, professional liability, surety, burglary and theft, farmowners, medical malpractice, federal crop, flood, earthquake, health, life and reinsurance, and personal lines such as homeowners aren’t part of the program. So the federal offer requirement doesn’t reach a commercial auto or truck policy.
Accepting or declining it
TRIA doesn’t require any policyholder to buy terrorism coverage, and it doesn’t set a price. The insurer has to show the premium for terrorism coverage as a separate line item, at offer and at renewal, along with the federal share of losses, and it has to disclose the $100 billion cap. The NAIC’s model disclosure gives you two choices: buy the coverage for the premium shown, or decline and sign that you understand you will have no coverage for losses from certified acts of terrorism.
If you decline full coverage, the insurer may negotiate partial coverage with you where state law allows, but it isn’t required to offer it. Workers’ comp works differently: Treasury notes that under state law, workers’ comp must cover terrorism risk and can’t exclude causes of loss with extreme aggregation risk.
What a certified act of terrorism is
TRIA coverage responds to certified acts. The Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, certifies an act that is violent or dangerous to human life, property or infrastructure; caused damage inside the United States (or to certain air carriers, U.S.-flagged vessels or U.S. mission premises abroad); and was committed by one or more individuals to coerce the U.S. civilian population or to influence U.S. government policy or conduct by coercion. Treasury can’t certify an act committed in the course of a war declared by Congress (except for workers’ comp), or one where property and casualty losses don’t exceed $5 million.
Your policy’s other exclusions still apply. The NAIC disclosure warns that a policy may exclude nuclear events, and Treasury reports that many insurers exclude nuclear, biological, chemical or radiological losses to some extent. An insurer that doesn’t cover those risks generally isn’t required to cover them for terrorism either.
The federal backstop and the 2027 date
Your insurer pays the claim under your policy. Treasury reimburses part of the insurer’s losses only after insured losses from certified acts in a calendar year exceed $200 million, the program trigger, and after the insurer absorbs its own deductible: 20 percent of its prior-year direct earned premium in the eligible lines. Above that, the federal share is 80 percent. The law caps both federal reimbursement and insurers’ liability once insured losses from certified acts pass $100 billion in a calendar year, which is why the disclosure says your coverage may be reduced if total losses go over that cap.
The 2019 reauthorization extended the program through December 31, 2027, and the regulations say coverage doesn’t have to be made available past that date, even on a policy that runs longer. Congress has considered an extension: Treasury’s June 2026 report describes a House bill (H.R. 7128) and a Senate bill (S. 4395) that would each extend the program through December 31, 2034. Until an extension becomes law, December 31, 2027 is the end date, so if your policy crosses into 2028, read the terrorism wording at renewal.
Lenders and standalone policies
The decline line isn’t always yours to sign. Fannie Mae’s Multifamily Selling and Servicing Guide (Section 502.05) requires each property to carry terrorism insurance for property damage and liability exposures, at no less than 100 percent of estimated insurable value for a single-building property and 90 percent for a multiple-building property. If you have a commercial mortgage, read the insurance section of the loan agreement before you decline, and keep the property policy limits in step with it.
A standalone terrorism policy covers terrorism only. Treasury reports, citing industry sources, that it is bought mainly by organizations insurers view as higher risk, when terrorism coverage isn’t available on the property policy, costs too much there, or is too narrow. A “certified” standalone policy follows the program’s terms. A “non-certified” one is written to cover terrorism as the policy defines it, whether or not Treasury certifies the act, and its losses aren’t reimbursed by the program.
Common questions
Is terrorism insurance required by law?
Federal law requires insurers to offer it on eligible commercial policies; it doesn’t require businesses to buy it. Workers’ comp is the exception, because state law requires it to cover terrorism, and a lender can require it as a loan condition.
Does my commercial auto policy include TRIA coverage?
Commercial auto is excluded from the lines the federal program covers, so the federal offer requirement doesn’t apply to it. Read the auto policy’s own terms and exclusions.
What happens if I decline terrorism coverage?
On the NAIC model form, you sign that you understand you will have no coverage for losses from certified acts of terrorism. The insurer may negotiate partial coverage where state law allows, but it doesn’t have to.
Does TRIA coverage apply to an attack that isn’t certified?
Coverage under the program responds to acts the Treasury certifies. A non-certified standalone terrorism policy is designed to cover terrorism as the policy defines it, whether or not the act is certified.
What happens to TRIA after 2027?
Current law runs the program through December 31, 2027. Congress has considered bills to extend it through 2034, so check where that stands before a renewal that runs into 2028.
Sources
- U.S. Treasury: Terrorism Risk Insurance Program
- 31 CFR 50.4: definitions (act of terrorism, program trigger, insurer deductible, eligible lines)
- 31 CFR 50.20: the make-available requirement
- 31 CFR 50.21: offer timing and partial coverage
- 31 CFR 50.10: disclosure of premium and federal share
- 31 CFR 50.15: disclosure of the $100 billion cap
- NAIC model policyholder disclosure notice of terrorism insurance coverage (hosted by Treasury)
- Federal Insurance Office: Report on the Effectiveness of the Terrorism Risk Insurance Program (June 2026)
- Congressional Research Service: The Terrorism Risk Insurance Act (TRIA), IF11090
- Fannie Mae Multifamily Selling and Servicing Guide, Section 502.05: Terrorism Insurance
General information about the federal Terrorism Risk Insurance Program as of October 2026, not legal or tax advice; TRIA, 31 CFR Part 50, state law and your policy’s wording control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.