Businesses today are exposed to a range of risks and threats that can severely disrupt their operations. While traditional insurance policies cover many of the common ones, they may not always be enough when it comes to safeguarding against acts of terrorism. That’s why many organisations have turned to Terrorism insurance.
This blog explores what Terrorism cover is and why it’s particularly relevant to other insurance areas such as Business Interruption, Property and Public Liability.
What is Commercial Terrorism insurance?
Commercial Terrorism insurance is a specialised type of coverage designed to protect businesses from the financial repercussions of acts of terrorism. These acts can manifest in various forms, including bombings, cyber attacks, and other destructive acts.
This insurance is essential for businesses as standard policies typically exclude acts of terrorism from their coverage.
How does it relate to Business Interruption insurance?
Business Interruption insurance is often included within a commercial property insurance policy and is designed to protect businesses when they experience an unexpected interruption in their operations. However, in most cases, Terrorism is excluded from this cover unless specifically taken out.
If a terrorist event disrupts business operations, the financial consequences can be severe. Not only can Terrorism coverage help businesses recover their lost income, but it can also cover expenses and even assist in relocating operations temporarily.
For example, say you own a café on a busy high street. If the street was to ever become unusable for a period of time, Business Interruption would usually kick in to cover the loss of income. However, should the street or building become unusable due to a terror-related incident, this may be excluded from your Business Interruption cover and Terrorism insurance would need to be in place to specifically address this situation.
Many businesses were impacted by the 10-day police cordon following the London Bridge attack, for instance. According to Pool Re, they lost an estimated £1.4 million.
What about Property insurance?
Property insurance covers damage to physical assets like buildings, equipment, and inventory. In cases of terrorism, significant property damage is often the outcome.
While standard property insurance policies typically exclude terrorist acts, just like the above example, Terrorism insurance would step in to fill this gap. It provides coverage for the repair or replacement of property damaged in a terrorist event, ensuring that businesses can recover without incurring crippling financial losses.
Picture yourself as a videographer who uses a unit for filming, editing, and storing your cameras and electrical equipment. A terrorism event takes place just outside the unit, and the unit, cameras and electrical equipment are all severely damaged. Terrorism insurance would help address this situation, allowing you to complete repairs, replace damaged equipment, and continue with your videography projects as soon as possible.
Public Liability insurance?
Terrorism insurance is not only relevant to protecting assets and income – it also kicks in to manage liability and mitigate risks in contingency events, such as film productions or large-scale gatherings.
In the event of a terrorist incident at a public gathering such as a music festival or sporting event, for instance, the liability risks are significant. From insufficient security (like failing to check bags properly) through to failing to have a proper emergency response plan in place, it can provide coverage for the legal liability of the business and pay defence costs and damages.
What if terrorism forces me to cancel my event?
Terrorism insurance can also impact scheduled events. As with other areas of insurance, Terrorism cover is normally excluded and has to be specifically added onto the policy. Once included it should pay for the cancellation, abandonment, and rescheduling of events and productions affected by terrorist threats or attacks.
For example, if your agency is hosting a summer BBQ but a terrorist event damages the gazebo, sound equipment, and surrounding buildings the week prior to the event, Terrorism insurance would step in. It could reimburse the expenses as a result of the incident, as well as the profit lost depending on the level of cover taken out.
Terrorism insurance isn’t just a good idea. It’s essential for modern businesses.
Terrorism insurance is a vital component of any business’ comprehensive risk management strategy. It bridges the gap in coverage left by standard insurance policies and provides peace of mind in an increasingly uncertain world.
By protecting against property damage, business interruptions, public liability, and contingency risks, this specialised insurance plays a crucial role in ensuring the resilience and financial stability of your business. If you’d like to assess your business’ exposure to these risks and incorporate Terrorism insurance into your overall risk management plan, get in touch with our team today.
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