It’s been a recognised gap in terrorism insurance – the lack of coverage for cases where there is no physical damage. Now here’s proof that insurers have their ears to the ground, with provider NMU updating its terrorism product to adapt with the times.
NMU has added the crucial non-damage trigger to its business interruption (BI) cover for terrorism policies, acknowledging that these days terrorists are able to inflict harm even without damaging property. Case in point: the recent attacks that targeted individuals instead of structures.
“As terrorists move away from causing property damage, businesses are increasingly exposed to uninsured BI losses because terrorism policies typically require physical damage as a trigger for BI cover,” noted NMU. “And many businesses are discovering to their cost that most insurers don’t cover such losses unless there is at least some physical damage.
“Those in the retail, hospitality, and entertainment sectors are particularly vulnerable to BI losses caused by the denial of access and subsequent loss of attraction that can follow events aimed solely at inflicting casualties, often in and around entertainment venues and tourist attractions.”
The new wording not only covers damage to own and third-party property, but also instances where vehicles, hand-held weapons, and explosive devices are used to cause death and injury – which has been the case in ‘crash into pedestrians’ attacks and those that feature knife-wielding terrorists.
“The evolving nature of terrorism incidents brings a whole new set of risks and exposures not previously considered or catered for, particularly in relation to BI losses,” commented NMU executive director Duncan McClean. “Recognising this, our new terrorism product has been updated to specifically include the critical protection that policyholders need.”
Pinsent Masons’ Nick Bradley, in his analysis published on Out-Law earlier this year, said
insurers must focus on how business interruption cover is being extended beyond the realm of damage to property.
“The real damage caused by the ‘lone wolf’-style tactics adopted by the attackers at Westminster, Manchester Arena, and London Bridge was loss of life, injuries, and significant disruption to local businesses,” he noted. “So-called ‘denial of access’ cover, for example, tends still to be linked to property damage.”
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