Terrorism: Acts of Terrorism: When Will Insurance Respond?

Insurance policies provide financial protection in a broad range of circumstances but each type of product specifies certain situations where the policy will not respond. These vary from one type of product to another, and can vary in detail between one insurer and another. It is important to check the details of your individual policy. However the questions and answers below seek to set out the usual approach for each of the main types of insurance. If you have specific queries on your policy you should approach your insurer or broker.

Property cover

Will my home be covered if it is damaged or destroyed in a terrorist attack?

Yes. Household, buildings and contents policies include damage by fire, explosion or impact whether caused accidentally, through the malicious act of an individual criminal or in an act of terrorism. This cover will normally include the cost of alternative accommodation whilst your home is being repaired, typically up to a total of 20% of the sum insured. However contamination cover, whether caused accidentally or through malicious or terrorist activity, is excluded under household policies. In these circumstances the consequential costs such as alternative accommodation would not apply either.

Some blocks of flats are insured under commercial, rather than household, policies. Under these policies terrorism damage is covered if the specific top-up cover readily available in the market has been taken up. This can be arranged either at the date of renewal, or added to the policy mid-term. This cover will normally include chemical, biological, radiological or nuclear contamination caused by terrorist activity. You should speak to your broker or insurer to obtain a quote and information on how to buy this additional cover.

Why isn't contamination cover included on Household policies?

Contamination has been a standard exclusion on household policies since the 1960΄s as the likely aggregation of claims (many homes will be affected by a single incident) and cost of clean-up could not be met by insurers without putting their financial viability at risk. This would not protect the interests of other policyholders. The additional cover available to commercial properties is only possible through the Pool Re Scheme, backed by government. However if the contamination is caused by a terrorist attack on premises containing nuclear material insured by the Pool Re Nuclear Scheme, the third party liabilities towards other people's property would be picked up by this specialist insurer.

Is cover available for businesses? What about consequential losses?

Yes. You can obtain terrorism cover as an add-on to your property cover and should ask your insurer for a quote, either at renewal or mid-term if you wish to review your situation. This is available on a competitively priced basis, but is associated with your property policy if obtained through the Pool Re scheme, available via most commercial property insurers. Alternatively some terrorism cover is available on a stand-alone basis through the Lloyds of London market.

Commercial property terrorism cover is normally provided on an All Risk basis and includes biological, chemical, radiological and nuclear contamination, and the consequential business interruption losses. However it does not include e-risks, nor losses due to hoaxes.

Why isn't terrorism cover a standard part of commercial property cover?

There is no statutory requirement to have this cover in place. However you should check your contractual requirements, as you may need to put in place such cover to meet your obligations under certain types of contract (for example in leases or loan agreements). You can opt into this cover if you require it by asking your property insurer for a quote and paying the additional premium.

Terrorism: Acts of Terrorism: When will Insurance Respond?

Insurance policies provide financial protection in a broad range of circumstances but each type of product specifies certain situations where the policy will not respond. These vary from one type of product to another, and can vary in detail between one insurer and another. It is important to check the details of your individual policy. However the questions and answers below seek to set out the usual approach for each of the main types of insurance.

If you have specific queries on your policy you should approach your insurer or broker.

Property cover

Will my home be covered if it is damaged or destroyed in a terrorist attack?

Yes. Household policies include damage by fire, explosion or impact whether caused accidentally, through the malicious act of an individual criminal or in an act of terrorism. This cover will normally include the cost of alternative accommodation whilst your home is being repaired, typically up to a total of 20% of the sum insured. However contamination cover, whether caused accidentally or through malicious or terrorist activity, is excluded under household policies. In these circumstances the consequential costs such as alternative accommodation would not apply either.

Some blocks of flats are insured under commercial, rather than household, policies. Under these policies terrorism damage is covered if the specific top-up cover readily available in the market has been taken up. This can be arranged either at the date of renewal, or added to the policy mid-term. This cover will normally include chemical, biological, radiological or nuclear contamination caused by terrorist activity. You should speak to your broker or insurer to obtain a quote and information on how to buy this additional cover.

Why isn't contamination cover included on Household policies?

Contamination has been a standard exclusion on household policies since the 1960΄s as the likely aggregation of claims (many homes will be affected by a single incident) and cost of clean-up could not be met by insurers without putting their financial viability at risk. This would not protect the interests of other policyholders. The additional cover available to commercial properties is only possible through the Pool Re Scheme, backed by government.

However if the contamination is caused by a terrorist attack on premises containing nuclear material insured by the Pool Re Nuclear Scheme, the third party liabilities towards other people's property would be picked up by this specialist insurers.

Is cover available for businesses? What about consequential losses?

Yes. You can obtain terrorism cover as an add-on to your property cover and should ask your insurer for a quote, either at renewal or mid-term if you wish to review your situation. This is available on a competitively priced basis, but is associated with your property policy if obtained through the Pool Re scheme, available via most commercial property insurers. Alternatively some terrorism cover is available on a stand-alone basis through the Lloyds market.

Commercial property terrorism cover is normally provided on an All Risk basis and includes biological, chemical, radiological and nuclear contamination, and the consequential business interruption losses. However it does not include e-risks, nor losses due to hoaxes.

Why isn't terrorism cover a standard part of commercial property cover?

There is no statutory requirement to have this cover in place. However you should check your contractual requirements, as you may need to put in place such cover to meet your obligations under certain types of contract (for example in leases or loan agreements). You can opt into this cover if you require it by asking your property insurer for a quote and paying the additional premium.

by George McGonigal

George is the proprietor of UK based insurance websites that allow visitors to obtain fast online quotations without obligation, for all types of insurance product. Why not check us out at the following sites. Car Insurance UK: Simple but substantial online directory of top UK Insurers. Car Insurance Scotland: Compare online quotes for residents of Scotland. Car Insurance Northern Ireland: Cheaper online quotes for car insurance.

---

Health Savings Account (HSA): Helpful for Older People?

The Health Savings Account (HSA) is an amazing tool that... Read More

Finding Term Life Insurance Online

What exactly is Term Life Insurance?Term life is a form... Read More

Car Insurance Advice for Young Drivers in the UK

Over the course of the last ten years, car insurance... Read More

Why Should I Go To A Life Insurance Broker?

A life insurance broker is a dedicated person that encourages... Read More

Keys To Controlling The Future of Health Care

Several key changes are necessary to get control of the... Read More

The Many Benefits of Travel Protection Plans

Many people purchase insurance thinking I want full coverage and... Read More

Young Driver Car Insurance

It has become increasingly difficult to get young driver car... Read More

Insurance or Assurance - Do You Need Reassurance?

Insurance versus assurance: what is the difference?Should you care?Yes!!The world... Read More

What Is Term Life Insurance?

There are two different types of life insurance, term life... Read More

Individual Health Insurance Plans - How To Find The Best Provider Online

Whether you are self-employed or a small business owner, finding... Read More

Life Settlements, More than a Cash Surrender Payout

With a life insurance settlement, seniors now have the ability... Read More

What Does Buildings Insurance Cover?

You will find that your lender will insist that you... Read More

Business Insurance; Information you will need

When you start a small business you will need to... Read More

Check Out The Variety of Auto Insurance Texas Style

They say everything is bigger and better in Texas, and... Read More

Tips On How To Save When Buying Car Insurance

If you want to save money when you purchase your... Read More

Home Insurance Terms

Home insurance, or even homeowners insurance, is an insurance policy... Read More

Life Insurance Basics

One of the most important things you can do as... Read More

Motor Insurance with Pass Plus

Is pass plus really worth it? What motor insurance discounts... Read More

Finding a Discount Car Insurance Broker

Discount car insurance brokerTimes past finding a discount insurance broker... Read More

What Type of Doctor Should I See Under My HSA?

You can withdraw money from your Health Savings Account (HSA)... Read More

Affordable Insurance Quotes To Save You Money!

Whether you're looking for insurance quotes for auto, life, travel... Read More

Tips for First Time Insurance Buyers

The are many scary things in this world. Buying insurance... Read More

How to Match the Right Insurance Policy to the 4 Stages of Life

As we go through life our needs change. A Young... Read More

Why Dont Women Have Life Insurance?

Traditionally, life insurance companies solicited men as the main breadwinners... Read More

Student Possessions Insurance - Insuring the Contents of Your Room

In the UK each September, 350,000 new students embark off... Read More