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Terrorism – Time to review your cover

What’s this all about?

Recent terrorist attacks in Paris and Tunisia are a stark reminder of the threat of a similar incident on UK soil. And, with the current UK threat level for international terrorism severe, now is a good time to review the cover you have in place.

How does this affect you?

It’s essential to check you aren’t inadvertently in breach of the rules. One area where this can happen is the adverse selection rule. To ensure you don’t fall foul of this ensure that you extend your insurance to include terrorism cover for all the property you insure and not just the sites you believe are at a higher risk.

This agreement was put in place to protect insurers and the government by ensuring a diverse risk pool of low to high risk properties. As such it applies to all of an organisation’s insured properties, whether they’re covered by one or multiple insurers or insurance intermediaries.

Failure to comply with this rule will result in any existing terrorism cover being discontinued as soon as practicable. This means it’s imperative to review existing cover arrangements and ensure you are not in breach.

The rules do allow for a couple of exceptions. For example, where a joint venture insures separately from the parent company, it is free to decide whether or not to take out terrorism insurance, regardless of the decision taken by the parent company. In addition, if a contractual obligation is in place, for instance lease conditions or lender requirements insisting on terrorism insurance, this can be accommodated providing cover is extended across all properties subject to the contractual obligation.

When reviewing your cover it’s also important to note the changes that are being made to Pool Re. In the past, many smaller businesses and those in less risky areas have found cover prohibitively expensive, creating a book of business concentrated towards higher risk properties. The changes, effective from 1 October 2015, include the introduction of an SME discount for businesses with less than £2m material damage sum insured; some changes to rates along with changes to postcode allocation; recognition, through discounts, of the value of large deductibles and loss limits; and a move to more risk reflective pricing.

How can we help you?

With these measures helping to modernise the scheme and make cover attractive to a more diverse audience, it is a good time to review your terrorism insurance, making sure cover not only complies with the rules but that you are taking full advantage of the changes to Pool Re.

Please complete one of the following if you would like to discuss this further:

We do everything we possibly can to check that we have got our facts straight, but it’s always possible that we could make a mistake (hopefully not or never would be better). Therefore we would like to make you aware that we accept no responsibility for information that may be factually incorrect or out of date, but we will do our best to make sure that all content is accurate. Our vision behind bringing the blog to the wider community is to keep our clients and prospective clients informed of their legal requirements, the different products on offer and how they may benefit your business and the new schemes we find which we think will benefit you.

We are Personal and Commercial Insurance Brokers based in Newquay covering the whole of Cornwall and the UK