Minn. Excludes Terror Cover From Fire Policy

NU Online News Service, April 8, 3:58 p.m. EDT?Minnesota Gov. Tim Pawlenty today signed into law a bill excluding damage from a terrorist attack from standard fire policies.

The state now no longer requires standard fire policy insurance contracts to cover a fire loss caused by a certified terrorism act if the insured refused coverage offered as mandated by the Terrorism Risk Insurance Act.

Minnesota became the third state in three weeks to change the standard fire policy, commonly referred to as the New York standard fire policy, following similar legislation by Virginia and Nebraska.

According to the Alliance of American Insurers, the insurance trade group based in Downers Grove, Ill., other states may soon follow suit--similar bills have been introduced in Connecticut, Louisiana, Massachusetts, Michigan, New Hampshire and Oklahoma.

The Alliance noted that industry efforts to change the law are also underway in Illinois, New Jersey, Pennsylvania and Washington as well as the 15 other states that require the New York standard fire policy.

Bill Schroeder, vice president of the Alliance's Midwest region, argued that the standard fire policy creates a conflict with the federal Terrorism Risk Insurance Act that is potentially dangerous for the financial health of insurers.

Mr. Schroeder said that since 9/11, it has become evident that terrorist acts can produce not only horrific damage, but can also create fires following the initial event that could be even more devastating.

When the federal government passed the terrorism backstop, however, it did not preempt laws regarding fire losses that could be caused by acts of terrorism. The changes in Minnesota law "allow insurers to exclude coverage of such fire damage following a terrorism act under certain conditions. This will ensure the stability of the state's commercial insurance marketplace, Mr. Schroeder said.

Special Reports /

Minn. Excludes Terror Cover From Fire Policy

Related Stories

Recommended For You