By Jackie Spinner Washington Post Staff Writer Tuesday, November 26, 2002; 11:55 AM

President Bush this morning signed a law that pledges billions of taxpayer dollars to help insurance companies pay claims from a future terrorist attack and is designed to jumpstart a market that had been in turmoil ever since last year's attacks.

Businesses and property owners that have not been insured against terrorism since their commercial policies renewed this year will automatically be covered for the next three months. But insurance executives and industry analysts said it could take many more months for the market to sort itself out.

Before the Sept. 11 attacks on the World Trade Center and the Pentagon, terrorism insurance was generally provided free within most commercial insurance policies. But many insurers stopped providing the coverage after the attacks because of the unknown risk associated with terrorism. Businesses with a large concentration of workers, skyscrapers, stadiums and hospitals in urban areas had the most difficult time finding the coverage, and some were unable to get financing as a result.

The new law voids terrorism exclusions approved by regulators in 45 states and requires that insurers offer terrorism insurance to all commercial policyholders. Policyholders will have 30 days to accept or reject the terms offered by their insurance companies. Some may elect not to take the coverage.

Insurance executives are scrambling to figure out just how much of the financial risk of terrorism that they want to take on and how much they're going to charge for it. Some executives and analysts warned that terrorism insurance will not be cheap, even if more coverage is available.

The law is expected to bring some immediate relief to the commercial real estate industry, which, according to trade group estimates, had seen billions of dollars worth of new construction projects put on hold or stopped because of a lack of terrorism coverage.

"Builders and investors can begin construction on real estate projects that have been stalled too long, and we can get our hard hats back to work," Bush said today in a White House ceremony attended by insurance and business leaders who had lobbied for the legislation. "Investors and markets will have greater confidence that our economy is strong enough to withstand a future attack, and that's important."

For the first year of the program, insurers will not have to seek regulatory approval for the terrorism insurance rates.

"The insurance companies have been very shifty about whether rates will drop," said J. Robert Hunter, director of insurance for the Consumer Federation of America. "I suspect we're going to see some fairy significantly high prices."

-- Anonymous, November 26, 2002