Terrorism Insurance - Time to Reconsider?

Historically, I think small business has neglected terrorism insurance with a not unreasonable consideration that, "it won't happen to us". The changing nature of terrorism and the fallout from terrorist acts might mean this needs to be reconsidered.

For over 20 years now, commercial losses from terrorist acts has not been covered under your normal property insurances. A separate cover is required and this can take the form of a bolt on to your current property insurance, or a separate stand alone policy.

Traditionally, I believe that businesses consider the likelihood of their premises being affected by a terrorist explosion causing damage to their buildings. However, only 30% of terrorist acts include the use of explosives so the probability of physical damage is diminished. What is more of a risk is the denial of access to premises or other interruption to your business where there is no physical damage. This may not be covered under a standard terrorism add on.

For instance, consider the Borough Market and Westminster Bridge attacks. Neither of these atrocities involved physical damage to neighbouring property but would have resulted in significant detriment to business within the areas sealed off by police in the days following the attacks and, indeed, for longer given the possible lower footfall in these areas in the weeks and months afterwards. These risks need to be addressed by specific cover.

The Salisbury poisonings would be another case where one would have thought significant losses would be borne by business in the vicinity. However, this would not be classified as a terrorist attack as there was no intention to cause panic amongst the public. Rather it would be viewed as an assassination attempt. In this instance businesses would look to government compensation for losses incurred. Perhaps it is time to reappraise your risk of losses arising from terrorist acts and look to put the right insurances in place to deal with this. If so, contact me here.