Terror Target?

If you've purchased commercial insurance in recent years, you've probably signed a form either accepting or rejecting terrorism coverage. The decision requires some serious thought.

"It's important to understand both the coverage and your risks," says M. Beth Parquette, president of Parquette & Associates Inc. Consider your location, type of business, risk of being a terrorist target and proximity to buildings that may be targets. Parquette says that even though most of her clients reject the coverage, she thinks getting it is a good idea, "especially if you own the building you're in or lease space to others."

Standard property insurance typically excludes terrorism coverage, although some carriers have begun incorporating it into certain policies. And with the passage of the Terrorism Risk Insurance Act in December 2005, the federal government limited insurance companies' losses and made terrorism insurance more affordable and readily available.

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Parquette says terrorism coverage for a smaller building costs $100 to $200 a year. "The cost [of] insuring larger buildings may run as much as 5 percent to 10 percent of the annual property premium," she says, adding that terrorism coverage isn't always optional. "Some lenders require that you carry this insurance."

Jacquelyn Lynn is a freelance business writer in Orlando, Florida.