Principals\Obligees.
02 Feb, 2003

To our Principals and Obligees:
On November 26, 2002, President Bush signed the Terrorism Risk Insurance Act of 2002. The Act provides a federal government insurance backstop in the event of acts of international terrorism.

With this Act come important responsibilities for the insurers and surety companies with respect to providing commercial policyholders (including surety bonds) with written notice regarding the availability of terrorism coverage. Each insurer must follow these procedures in order to qualify for federal reimbursement under the new law.

The Notice
We are required to make terrorism coverage available on surety bonds and each policyholder/surety bond holder must be notified. We are required to provide a written notice of the availability of terrorism coverage to the policyholder/surety bond holder each time that a policy/bond is offered, purchased and renewed. We must also provide the notice to all in-force policyholders/surety bond holders. The notice must disclose the premium that is charged, if any, to the policyholder/surety bond holders for terrorism losses covered by the backstop program and the federal share of compensation for terrorism losses covered by the program. At this time, we will not be billing a premium for terrorism coverage relating to surety bonds. As a result, the premium charge reflected on the notice for terrorism coverage will be $0.00.

For your information, a copy of the notice is shown below in Word and PDF format.

IMPORTANT: It is important to point out that the notice only clarifies coverage already provided by the bond and does NOT alter coverage.

For additional information, please visit the Treasury’s department website at:
http://www.ustreas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/