Until 9/11, most standard insurance policies used to provide protection against the risk of terrorism automatically. However, after September 11, 2001, premiums for terrorism coverage have increased. In India, effective from 1st April 2002, terrorism was made a separate add-on cover, which had to be bought at the option of the insured by paying additional premium at the rate of Rs. 0.50 per mille for industrial risks and Rs. 0.30 per mille for non-industrial risks on the total value of the property. And a separate terrorist pool has been created. The classes of insurance presently covered by the Pool are Fire, IAR, Engineering (EAR, CAR etc.), property section of certain package policies and some miscellaneous policies.
What is Terrorism Coverage?
Terrorism Coverage provides protection against losses due to the acts of terrorism. “Terrorism/Terrorist activity” means any actual or threatened use of force or violence directed at or causing damage, Injury, harm or disruption, or commission of an act dangerous to human life or property, against any individual, property or government, with the stated or unstated objective of pursuing economic, ethnic, nationalistic, political, racial or religious interests, whether such interests are declared or not. Robberies or other criminal acts, primarily committed for personal gain and acts arising primarily from prior personal relationships between perpetrator(s) and victim(s) shall not be considered Terrorist activity. Terrorism shall also include any act, which is verified or recognized by the relevant Government as an act of terrorism.
Is there any tailor made policy to cover terrorism?
There is no tailor-made insurance policy against terrorism.
Most insurers now exclude terrorism with a clause that will probably go something like this in their General Exclusions Section (exclusions which affect all the sections of a policy);
“Terrorism Damage Exclusion Warranty
Notwithstanding any provision to the contrary within this insurance it is agreed that this insurance excludes loss, damage cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss. For the purpose of this endorsement an act of terrorism means an act, including but not limited to the use of force or violence and / or the threat thereof, of any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purpose including the intention to influence any government and/or to put the public, or any section of the public in fear. The warranty also excludes loss, damage, cost or expenses of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to action taken in respect of any act of terrorism. If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by this insurance the burden of proving the contrary shall be upon the insured. In the event any portion of this endorsement is found to be invalid or unenforceable, the remainder shall remain in full force and effect.”
Which policy provide terrorism cover?”
A. Life Insurance
Life insurance policy usually provide cover to the insured against death by any means including terrorist activities, unless it is specifically excluded.
B. Personal Accident Insurance
Personal Accident Insurance does provide cover to the accidental death claim or permanent and total disablement claim on account for terrorism or acts of terrorism, unless it is specifically excluded.
C. Health Insurance
Health insurance policy usually provide cover to the insured medical expenses due to terrorist activities, unless it is specifically excluded.
D. Home Insurance
Under Home Insurance the terrorism cover is an extension of the fire insurance section cover. This is not inbuilt but however, one can opt for terrorism cover under the household ‘s policy. But the home insurance policy will not cover a fire triggered by a terror act, unless it is covered separately.
E. Travel Insurance
Travel Insurance does not provide cover to any medical claim or accidental damage claim on account for terrorism.
Can we buy terrorism cover mid-term?
You can buy terrorism cover mid-term also, but insurer may refuse to cover it, if there is a developing case of a peril. For example – After Mumbai blasts
Always read every insurance policy bond and the policy wording to make sure that it is right for you and to ask for assistance from a professional advisor if you need anything explained or more specialist cover.