Terrorism Insurance – planning for the unexpected

Insurance cover for damage to property, loss of income if you have to stop or suspend business operations or your legal liabilities following a terrorist incident is almost certainly not included unless you have specifically requested for terrorism insurance to be included beforehand.

You should therefore assume this cover is excluded although terrorism cover can normally be included for a small additional premium, depending of course on the locality and risk.

Given the threat of terrorism in the UK and especially since the terrorism attacks in France and Belgium, there is still an incredibly low take up to add terrorism cover to an insurance policy. This could be because the policyholder assumes that terrorism cover is automatically included with their insurance policy, or because the policyholder does not consider they will be at risk from a terrorist incident.

However, to put this into comparative terms with other insurance covers, most companies want to include Fire insurance but are very unlikely to ever suffer a loss from fire. Both a fire and terrorism incident could be catastrophic for a business.

It should also be considered that whilst a terrorist incident may not destroy your business, it could affect individuals and their dependents. Or if you were on the fringe of an attack it could still lead to partial damage.

We tend to think of terrorist activities affecting the major cities and this of course is usually true. But businesses located in target areas such as near government buildings, major transport hubs, sports and social event stadiums or famous buildings could be at risk. 

When considering whether a business is at risk from terrorism, alongside the current increased threat in the UK in general, there has been an recent increase in activity from activist groups around Liverpool, Manchester and Lancashire and in the past where terrorist attacks in Warrington and Manchester.

Other risks you may consider include a bomb being assembled or travelling through your local area and there being an accidental explosion. Bomb makers can live and work anywhere.

Terrorism insurance would provide you with peace of mind and the financial protection to put things right if the worst should happen. Ultimately it is a decision for the business or property owner as to whether to insure against terrorism.

Mitchell Charlesworth can provide a cost indication and summary of cover to add terrorism insurance to you policy upon request.

Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales and authorised and regulated by the Financial Conduct Authority for investment business