by Amanda Swinburn
New York state has rejected an attempt by insurance companies to create a terrorism exclusion limiting payouts of over $25m (£17m) for New York City buildings.
The recommendation was made by the National Association of Insurance Commissioners (NAIC) , but was rejected by the state insurance superintendent.
The state is currently considering 50 other narrower proposed exclusions, but won't support the exclusion for losses above $25m.
"That would be pretty much every building in New York and the superintendent would not support that," said a spokeswoman for the superintendent.
The association said the exclusion is needed to protect insurance companies against crippling losses. The federal government is reimbursing much of the cost of 11 September attacks, but no policy has been established for future acts of terrorism.
When announcing the recommendation, NAIC president Terri Vaughn said: "With the inaction by Congress, state regulators have been placed in the unfortunate position of having to approve some exclusions in order to protect the solvency of companies in the commercial lines market."
Thirty-six other states and territories have supported the recommendation, but many do not have properties as high-priced as those in New York City.
Insurance Information Institute chief economist Robert Hartwig praised the move and said he expected virtually all states to approve the exclusions by the end of January.