Commercial insurance update: Is your business covered for acts of terrorism?

Are you clear what terrorism insurance cover your business has in place? Unfortunately, in 2017 the threat of terrorism stayed at the forefront of our minds. There were several deadly incidents, including the attacks at Manchester Arena and Westminster Bridge. The number of people arrested in connection with terrorism offences rose to a record high in 2017. And businesses and individuals continue to be warned that an attack is highly likely.

 

The terrorism picture in 2018

“The threat level has not reduced below SEVERE for nearly four years and is unlikely to reduce in the short term. Islamist extremist-inspired attacks targeting crowded places (using bladed weapons and vehicles) pose the greatest threat and, by default, are the hardest to interdict. Threat complacency remains a concern and Pool Re, alongside its partners, will continue to improve the understanding of the complete threat landscape and promote risk mitigation measures to help harden the business community against low technology as well as sophisticated, and increasingly novel, attack vectors.” Ed Butler CBE DSO, Head of Risk Analysis, Pool Re

Obviously, the main concern in a terrorist attack is for the safety of anyone caught up in it. But after this, the business implications can continue the devastation for many months after the clear up. Putting right damage to property, handling any interruption to business, and the costs of legal liability issues mean terrorism can destroy businesses too. And that’s where having the right terrorism insurance in place can help.

Is my business automatically covered for acts of terrorism?

No. Many people assume that damage caused by terrorism is covered in the same way as it is for a fire or flood. But terrorism is actually excluded from most standard policies.

The good news is that if you have employer’s liability insurance, most policies will pay out for injuries caused to employees as a result of terrorism. However, it’s always worth double-checking this first.

How can I protect my business financially from the risk of terrorism?

Preparing for every risk is an essential part of a robust business plan. And that includes taking steps to mitigate potential damage as a result of terrorism. Specialist terrorism insurance fills the gap left by standard insurance so you can have peace of mind your business is prepared.

What is Pool Re (Pool Reinsurance)?

Pool Re is one of the UK’s most significant providers of terrorism insurance. It was founded by the insurance industry to provide cover against acts of terrorism. It has the backing of her Majesty’s Treasury (HMT) and most of the main commercial insurers and Lloyd’s Syndicates are members. Membership acts as a guarantee that cover can be provided for losses as a result of terrorism no matter how large the claim. You cannot take out terrorism insurance directly through Pool Re, but can arrange this through your broker or insurance company.

Good news for businesses

The good news is that Pool Re is trying to increase the uptake of terrorism insurance cover. There are also other insurance businesses prepared to take on terrorism, making the marketplace more competitive. And that can mean lower premiums for businesses, especially smaller businesses.

 

What does terrorism insurance cover?

A commercial terrorism insurance policy can be tailored to give you the level of cover you need. Commonly it includes protection against damaged or completely destroyed property, including buildings, business equipment and other contents. If you’re concerned how your business could survive if it is forced closed for a period of time following a terrorist attack, you can take out cover that reimburses you for lost income due to business interruption. And you can also opt for insurance that will cover any liability claims that are brought against your business.

Are there any exclusions?

It’s important to carefully go through your terrorism insurance cover to make sure it provides the level of cover you need. Alternatively, talk this through with your trusted insurance broker. Nuclear, biological, and chemical attacks may not be included in your terrorism insurance.

Cyber terrorism is another area of growing concern. Not all terrorism insurance policies will automatically cover you against the financial impact of a cyber attack on your business. Check first and take out separate cyber attack insurance if required. You can talk to your broker for more details on this.

 

What businesses need terrorism insurance?

Any business can be affected by terrorism, whether it’s a small, independent business or a multinational company. Businesses located in busy cities, near popular tourist spots or places where groups of people gather could be considered at higher risk.

 

Definition of terrorism

Terrorism is not just about bombs. And it’s not just about the threats from extremist Islamist-groups. The legal definition of terrorism may be wider than many people’s view. And that can mean many businesses are exposing themselves to risk.

Pool Re defines terrorism using the definition contained in the Reinsurance (Acts of Terrorism) Act 1993. This states that terrorism is any:

“…acts of persons acting on behalf of, or in connection with, any organisation which carries out activities directed towards the overthrowing or influencing, by force or violence, of Her Majesty’s government in the United Kingdom or any other government de jure or de facto.”

That means a terrorist incident is any organised violence that aims towards political change – including animal rights groups, and anti-capitalist groups.

In conclusion, for peace of mind, speak to an expert independent broker, like Park Insurance. A broker will carefully go through any policy wording with you. That way you can be confident you have the level of cover your business needs.

Call Park Insurance for expert advice on terrorism insurance

At Park Insurance, we know just how worrying the thought of a terrorist act can be, especially for those living in ‘high-risk’ target areas such as the centre of major cities or near strategically important sites. We’ll work closely with you to find the right cover that is both proportional to the level of risk and affordable for you, the customer. And that means peace of mind.

Get a quote now for terrorism insurance cover or call our friendly team on 0117 9556835.