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Terrorism Cover or Not?

We live in an ever-changing world of uncertainty, where we can be exposed to all sorts of natural and man-made hazards and dangers. Whilst the vast majority of the time we are secure in our daily lives, there is the potential that we could be impacted by a terrorist act, this Insight considers the need for Terrorism Cover.

Why should I purchase Terrorism Cover?

We live in a world where terrorism is an ever-present threat. Within the United Kingdom, we have seen the threat level alternate between ‘moderate’ to ‘severe’ on a regular basis, with ‘severe’ becoming the norm.

Terrorist attacks are in the main random but all have devastating consequences, not just for those caught up in the atrocity but for our society as a whole. Lone wolf terrorists, or small groups can strike at any time and in any place, destroying lives and damaging property and infrastructure.

We have seen in recent times the use of everyday items, cars, vans, knives, being used to carry out terrorist acts. You will all have seen the coverage of the Westminster, London Bridge and Finsbury Park attacks where the perpetrators used vehicles and knives to commit their devastating strikes.

However, terrorists do use explosives to carry out their deadly pursuits, as witnessed in the 7/7 bombings in 2005 and the targeting of children at the Manchester Arena atrocity in 2017 as well as in the failed Parsons Green bombing. With the ready access via the internet of instructions on how to build devices, these can be made easily within a home or close by both being miles away from the intended target. The devices can be highly volatile, particularly in the hands of a relative novice and may not even make it to their final destination before detonating.

The Market position

As a world-wide market, the insurance industry withdrew terrorism cover as being standard following the 09/11 attacks in the United States. It is now only available through an additional premium on your buildings policy.

You may find that having Terrorism cover in place is a contractual obligation under your lease and/or mortgage provider. In Qdime Ltd – v- (1) Bath Building (Swindon) Management Co Ltd, (2) Leaseholders at Bath Building, Swindon [2014] UKUT 0261 (LC), 16/06/14, the Upper Tribunal (Lands Chamber) held that Terrorism insurance is required in order to comply with a covenant to obtain insurance covering “usual comprehensive risks in accordance with the [Council of Mortgage Lenders] recommendations.”

In Summary

The likelihood of the unthinkable happening may seem remote, but if it does happen and Terrorism cover is not in place, you will potentially be facing significant uninsured losses. The resultant damage from the usual perils on your building insurance, such as fire or explosion, would be excluded if the primary cause of loss is as a result of a terrorist act.

We would urge you to consider taking out terrorism cover to protect you in the event of the unthinkable.