Terrorism Insurance & The Unseen Gap in Cover

Sadly, 2017 was fraught with terrorist attacks in Britain with the number of people arrested for terrorism linked offences rising by almost 60% to record levels. Terrorist attacks often result in devastation and chaos, with loss of life and injury, damage to property, business interruption, damage to brand reputation and legal liability issues.

Such has been the rising threat of terrorism in the UK in recent decades that the Terrorism Act 2006 was introduced in the aftermath of the 7 July 2005 London bombings. The government considered the Act a necessary response to unparalleled terrorist threats. The perception of this threat level has moved over time since, but has never disappeared and there have been a succession of incidents in the UK and Europe over the last 15 years. The type of attacks has also changed over time, with terrorism traditionally seen as ‘blast’ damage causing primary property damage; a view which is now challenged by a number of violent attacks focussing on fear, chaos and loss of life, sometimes with no or minimal property damage, but with insureds left with no cover, due to material damage proviso style clauses even where some terrorism cover was in place.

Standard insurance policies do not automatically or typically include any terrorism cover, meaning there is real potential for gaps in cover to exist, which clients are often not adequately aware of. One example of this is the case of QDime Ltd v Bath Building (Swindon) Management Company Ltd (2014). The case highlighted the importance of considering terrorism as an insurance peril to be covered against. The court ruling upheld that where an insurance clause includes a requirement that insurance should be in place against explosion, then this should be understood to include terrorism. Since explosion is generally required to be covered, there is an onus on property managers, managing agents and property owners to arrange terrorism cover, where they may not be immediately aware of this obligation and hence in breach of covenants and ultimately exposed.

In response to the growing needs for comprehensive terrorism insurance that offers cover for the damage caused to residential or commercial premises, or for the interruption such attacks can have on businesses, Nelson Policies at Lloyd’s has developed a terrorism product which offers a solution to all of these issues. Not only does Nelson Policies at Lloyd’s offer a wide definition of what constitutes a terrorist act, but also offers a comprehensive wording with vital and relevant extensions provided as standard, including but not limited to:

  • Non property damage BI cover, including denial of access
  • Suppliers extensions
  • Threat cover

Other benefits:

  • Optional Chemical, Biological, Radioactive & Nuclear cover
  • No decline areas
  • Lower premiums than pool re with more generous commissions
  • Account transfers and price matching considered

To find out more about Nelson Policies at Lloyd’s terrorism product and why it is becoming increasingly important for brokers to offer such cover, contact our friendly team of expert underwriters. Call Nelson Policies at Lloyd’s today on 01622 681243.

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