Terrorism Insurance

Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities.

Terrorism coverage is provided as an additional cover to all risks underwritten under fire, engineering and property damage.

Terror insurance comes as an inbuilt cover for personal accident policies, and most health and life insurance policies though some home insurance policies do offer a cover for it, some don’t include it as part of the package. It may need to bought at an additional cost.

It is considered to be a difficult product for insurance companies, as the odds of terrorist attacks are very difficult to predict and the potential liability enormous. This combination of uncertainty and potentially huge losses makes the setting of premiums a difficult aspect.

Most insurance companies therefore exclude terrorism from the insurance coverage.

What are the salient features of a terrorism cover?

Some of the salient features of terror cover as an add-on are:

  • Terrorism cover is taken as add on cover by payment of additional premium at the option of the insured.
  • The sum insured opted for can include material damage & business interruption.
  • The maximum aggregate loss may vary from company to company.
  • The premium charged will vary based on the risk occupancy (i.e. industrial/non industrial /residential) and on the sum insured.
  • Mid-term inclusion of terrorism coverage is not allowed.
  • Terrorism cover has to be taken only in conjunction with property or engineering covers.