Terrorism - Replacement Cost/Limit

  • 24 March 2023
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Terrorism - Replacement Cost/Limit
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Waiver Type:                            Renewal/New Origination

Insurance Type:                        Property

Insurance Term:                       Terrorism - Replacement Cost/Limit


Template Outline:


#1 - How to write the introduction section of the waiver?

When writing the introductory section of the waiver, it’s important to clearly state the requestor’s identity and the purpose/type of waiver the requestor is applying for. Below are a couple of examples that can be used for assistance if needed.

<Organization/Borrower name> is currently seeking the exception of coverage requirements pertaining to the <Coverage name>. These requirements include <requirement details>.

<Agent name> is currently seeking the exception of coverage requirements pertaining to the <Coverage name> on behalf of <Organization/Borrower name>. These requirements include <requirement details>.

 #2 - What property details should be included in the exception request?  

The organization/borrower should provide all details pertaining to the property the current coverage applies to. Such details may include the property name, location, number of buildings, and number of stories for each building. Provided below is an example that can be of further assistance when writing this section.

<Organization/Borrower name> currently owns <Property name>. The <Property name> currently has <number of buildings> that are spread out over <number of cities/states>. These buildings are located in <City 1, State 1>, <City 2, State 2>, and <City 3, State 3>. Buildings located in <City 1, State 1> and <City 2, State 2> have <number of stories> each, whereas buildings located in <City, State 3> have <number of stories> each.

#3 - How to provide details about the current coverage?

Providing details about the current coverage the borrower has is highly critical as it can help demonstrate a certain extent of compliance. These details may include the details of the insurance provider, policy name, structure, type, and coverage limits. In addition, the property’s total insurable value (TIV) can also be included in this section. The example provided below can be used for additional guidance if required.

The <Property name> consisting of <number of buildings> spread across <number of cities/state> is currently insured by <Insurance provider name>. The <Property name> has a <Coverage name 1> and <Coverage name 2>. Both these policies are structured as <Policy structure details>. <Coverage name 1> has a per occurrence loss limit of <dollar amount> and an annual aggregate of <dollar amount>. In addition, <Coverage name 2> provides coverage of <dollar amount> for <coverage type>. As of <date>, <Property name> has a TIV of <dollar amount>.

#4 - How to emphasize the property’s proximity to risk?

Emphasizing the property’s location and its proximity to risk can help illustrate the possibility of the borrower/property undergoing events that may result in damages that exceed coverage limits. When writing this section, the borrower should provide details about all properties to which the coverage that applies. Below is an example that can be used for further assistance if required.

Buildings pertaining to the <Property name> are spread out across <number of cities/states>. All buildings in <City 1, State 1> are located in a remote area and are not near any areas of public gatherings. The location details for these buildings are as follows <Locational details 1>. As for <City 2, State 2>, the locational details for the building are as follows <Locational details 2>, and none of the buildings are located near public gathering areas. Locational details of buildings in <City 3, State 3> are <Locational details 3>. The nearest area of public gathering from these locations is <number of miles> away. Therefore, all buildings pertaining to <Property name> are not likely to witness events that may lead to damage in excess of the current coverage limits.

 #5 - How to demonstrate financial stability when applying for a waiver?

Demonstrating financial stability can help the borrower illustrate the availability of sufficient capital to account for damages that may exceed coverage requirements. This can be done by providing details about the borrower/guarantor/sponsor and their financial position. The example provided below can be used for further assistance when writing this section.

<Company name> is currently identified as the sponsor for <Organization/Borrower name>. Their headquarters is located in <City, State> at <Company address>. <Company name> has been involved in owning, managing, and developing <Property types> real estate since <date/year>. As of <date/year>, <Company name> is able to account for damages of <dollar amount> if the current coverage requirements are exceeded.

#6 - How to justify the request for approval?

Before submitting the waiver, the borrower should provide a justification as to why their request should be approved. This justification can be made based on various factors that include financial strength, the sufficiency of the current coverage, and the proximity to risk. In addition, being granted a waiver for similar coverage requirements in the past can also help strengthen the request for approval.

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