What is the coverage limit set by the Terrorism Insurance Act for insured losses?

The Terrorism Insurance Act establishes a framework for the federal government to provide reinsurance to insurance companies for losses resulting from acts of terrorism. Under this Act, the coverage limit for insured losses is quite significant and specifically set at $100 billion. This means that once losses from a certified act of terrorism exceed this threshold, the federal government will step in to share in the payment for those losses.

Additionally, the act stipulates that the government will cover 90% of the insured losses that exceed the insurer's retention amount. This ensures that insurance companies can manage their risk exposure effectively while providing coverage against potential substantial losses due to acts of terrorism.

The parameters set by the Terrorism Insurance Act are designed to create a balance between insurers’ obligations to their policyholders and the limitations of the insurance market in handling catastrophic events. The other choices differ in both the monetary threshold and the percentage of losses covered, which does not align with the provisions stated in the Terrorism Insurance Act.