The recent incidences of terror attacks have compelled various insurance companies to offer terrorism insurance coverage. On this line, property insurance companies are offering terrorism coverage under their policies.
Key Takeaways
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The “Add-on” Reality: Terrorism is not automatically included in base property or fire insurance. You must specifically request it and pay an additional premium to activate this clause.
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Secondary Crimes Exclusion: As highlighted in the Pune case study, if your office is damaged by an attack and subsequently looted while the building is abandoned, the terrorism clause will pay for the building damage but not for the stolen computers.
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Law and Order vs. Terrorism: Insurers distinguish between “terrorist acts” and “routine law and order” issues (like a local riot or protest). It is crucial to check how your insurer defines these, as the latter may require a Strikes, Riots, and Civil Commotion (SRCC) add-on.
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Insufficient Sum Insured: There is no benefit to buying a “token” terrorism cover. If the cost to rebuild your office is ₹10 Crore, but your terrorism limit is capped at ₹50 Lakh, you will face a massive financial shortfall.
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Non-Physical Damage: Terrorism insurance typically covers physical assets. For the loss of income during the 10 days employees didn’t attend (as in the case study), a Business Interruption rider would be required.
As per insurance companies, any act which causes any kind of physical violence, irrespective of whether there is any loss of life or property, is considered terrorism. Generally, it includes all those attacks which are carried out by either individuals or a group of people together to weaken established governments.
It means any loss or damage caused to your property by terrorist activity will be covered under property insurance.
Read More: How are assets valued property insurance policy
While, in most cases, the terrorism clause covers terrorist attacks, they do not include biological, chemical, radiation, or nuclear attacks. Further, the scope of coverage for financial loss from terrorism largely depends on the property insurance policy.
Here, it is important to note that if you want to cover the terrorism clause in your property insurance policy, you would have to pay the extra premium as this will be considered as an add-on. Also, the scope of coverage for financial loss from terrorism activities will depend on the property insurance policy.
While including terrorism coverage under your property insurance, carefully read all the terms and conditions as some insurers do not cover loss or damage caused to your property due to a routine law and order issue.
Property insurance policies cover fire insurance and offer coverage against loss or damage that may arise due to fire. However, property insurance policies do not cover such loss or damage arising out of burglary, theft, looting, housebreaking, etc.; which can happen after terrorism.
While buying the terrorism cover, make sure it is sufficient to offer you coverage. There is no point in getting coverage against terrorism cover if it is not sufficient.
Case on Terrorism Clause property insurance
R.S Associate has a growing business in India. A few years back, the company opened its office in Pune as a part of its business expansion. The company was confident that its new office will help in targeting the overseas markets. Here for its Pune office, the company had bought property insurance i.e., an office insurance policy, which it now planned to extend to its Pune office also. He asked his insurer who offered a new property insurance policy for a new office to R.S Associate.
Considering how vulnerable the city was to terrorism, R.S Associate paid extra premiums to get coverage against terrorist activities under property insurance.
While the policy promised to offer coverage in case of terrorist activity, it specifically excluded events like chemical war, nuclear radiation, etc.
However, it was stated in the policy that it will not cover loss or damage which may arise due to theft, burglary, looting, etc.; after terrorism.
Read More: What is Local Authorities Clause in Property Insurance?
Summary: Terrorism Coverage in Property Insurance
Unfortunately, last year, the city was attacked by terrorists, including R.S Associate’s Pune office. Nearly 20 employees of R.S Associate got injured during the attack. Luckily, everyone survived the attack, however, the office building suffered major damages.
As R.S Associate had a property insurance policy, it approached the property insurance company for the settlement of a claim. In this case, their policy had a terrorism clause, and therefore, the insurer agreed to settle claims which happened due to terror attacks.
After carefully, reviewing the situation, the insurer computed the total loss as Rs 50 loss, which it submitted once the policyholder submitted the necessary documents, like a duly filled claim form, a complete account of the accident, etc.
The terrorist activities spread terror among employees of R.J Associate, who did not attend the office for the next 10 days. Sadly, the theft happened during this tenure and thieves took away computers. When R.J Associate informed about the theft to the insurance company, the insurer refused to settle the claim pertaining to the theft.
Here though, the property insurance policy covered terrorism attacks, it did not cover theft which happened after terrorism.
Frequently Asked Questions (FAQs)
Q1: Does a standard Fire Insurance policy cover damage from a terrorist-led explosion?
A) No. In 2026, most standard fire policies explicitly exclude terrorism. You must buy the Terrorism Add-on to ensure that fire or explosions caused by a terror attack are covered.
Q2: What is “NBCR” and why is it excluded?
A)NBCR stands for Nuclear, Biological, Chemical, and Radiation attacks. Most insurers exclude these because the scale of damage is too vast to quantify or fund. These are considered “uninsurable risks” and are usually handled by government compensation schemes rather than private insurance.
Q3: If my office is looted immediately after a bomb blast, why won’t my terrorism insurance pay?
A) Terrorism insurance is a “Named Peril” cover—it only pays for the damage caused directly by the act of terror (the blast or fire). Theft and Looting are separate perils. To be covered for those, you must have a standalone Burglary Insurance policy active at the time of the loss.
Q4: Is “Cyber-Terrorism” covered under a property insurance terrorism clause?
A) No. This clause covers physical damage to your building and furniture. For digital attacks, data hacking, or ransom demands by terrorist groups, you would need a specialized Cyber Insurance policy.
Q5: How is the premium for terrorism cover calculated?
A) The premium is usually a percentage of the total Sum Insured of your property. In 2026, rates are often dictated by the National Terrorism Pool, which helps insurers manage the high risk associated with these events across the country.
About The Author
Shivani
MBA Insurance and Risk
She has a passion for property insurance and a wealth of experience in the field, Shivani has been a valuable contributor to SecureNow for the past six years. As a seasoned writer, they specialize in crafting insightful articles and engaging blogs that educate and inform readers about the intricacies of property insurance. She brings a unique blend of expertise and practical knowledge to their writing, drawing from her extensive background in the insurance industry. Having worked in various capacities within the sector, she deeply understands the challenges and opportunities facing property owners and insurers alike.
