1

April 5, 2006 

Dear Mr. M: 

This responds to your letter dated December 15, 2005, regarding the applicability 

of the mandatory availability (“make available”) requirements of section 103(c) of the 

Terrorism Risk Insurance Act of 20021

 (“TRIA” or “Act”) to package policies. 

In your letter, you state that your firm represents XYZ Insurance Company 

(“XYZ”), an insurer that offers commercial property and casualty insurance in 35 states, 

principally to small business owners. You further state that it is the regular practice of 

XYZ to offer such insurance through policies representing a package of standard 

coverages that typically are not individually negotiated (“package policies”). For new 

and renewal policies offered after TRIA was enacted,2 you state that XYZ included 

coverage for certified acts of terrorism under TRIA in all its package policies and charged 

a premium for this coverage. A policyholder or applicant could reject the package policy 

by declining to purchase the entire package policy or could accept the entire package 

including the terrorism risk insurance component, but could not accept the package 

without the terrorism risk insurance component. 

Your letter asks whether the “make available” provision of section 103(c) of 

TRIA permits an insurer to offer coverage for losses from certified acts of terrorism 

within a package policy of property and casualty insurance without offering the applicant 

an option to decline the terrorism risk insurance component of the package policy. 

TRIA Statutory and Regulatory “Make Available” Requirements 

TRIA section 103(c) requires that each insurer subject to the Act: 

(A) shall make available, in all of its property and casualty insurance policies, 

coverage for insured losses; and 

(B) shall make available property and casualty insurance coverage for insured 

losses that does not differ materially from the terms, amounts, and other coverage 

limitations applicable to losses arising from events other than acts of terrorism. 

Treasury’s make available regulation is located at 31 CFR 50.21(a). The regulation 

provides, in part, that the requirement to make available coverage for losses from 

 

1

 Pub. L. 107-297, 116 Stat. 2322, 15 USCS § 6701, note. The TRIA Program was recently extended 

through 2007 by Pub. L. 109-144, 119 Stat. 2660, 15 USCS § 6701, note. 

2

 At the time TRIA became effective on November 26, 2002, a number of these package policies contained 

exclusions for losses from acts of terrorism. As you note, these exclusions were nullified by section 105(a) 

of TRIA when the Act became effective. 
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certified acts of terrorism applies at the time an insurer makes the initial offer of coverage 

as well as at the time an insurer makes an initial offer of renewal of an existing policy. 

Application of Make Available Requirements to Package Policies 

Treasury’s regulation 31 CFR 50.21(a) addresses the times at which insurers must 

make offers of coverage for insured losses. There is no requirement in TRIA that an 

applicant/policyholder accept an offer, nor is there a requirement that an insurer negotiate 

changes in a policy to allow exclusion of terrorism risk coverage after an insurer has 

made an offer that included terrorism risk coverage (in accordance with section 103 of 

the Act and Treasury regulations) and that offer was rejected. 

Further, in specific response to your question, TRIA does not require an insurer to 

make coverage for losses from certified acts of terrorism optional in a package policy. If 

the terms, amounts and coverage limitations for the terrorism coverage component of the 

policy are not materially different from those for other component coverages in the 

policy, a package policy could satisfy the make available requirements of TRIA. There is 

nothing inherent in a package policy that is prohibited by TRIA’s make available 

requirements. 

This letter only addresses the applicability of the make available requirements of 

TRIA to package policies. We express no opinion, and take no position, on the 

application of any state law or regulatory agreement concerning the packaging of 

policies.3

 

Sincerely, 

Jeffrey Bragg 

Executive Director 

Terrorism Risk Insurance Program 

 

3 See TRIA section 106(a) concerning preservation of state law.