property insurance

The recent incidences of terror attacks have compelled various insurance companies to offer terrorism insurance cover. On this line, property insurance companies are offering terrorism coverage under their policies.

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 as terrorism. Generally, it includes all those attacks which are carried out by either individuals or a group of people together to weaken the established governments.

It means, any loss or damage caused to your property by terrorism activity will be covered under property insurance.

Read More: How are assets valued property insurance policy

While, in most of the cases, 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 terrorism clause in your property insurance policy, you would have to pay 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 cover under your property insurance, carefully read all the terms and conditions as some insures 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, house breaking, 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

R.S Associate has its 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’s office, the company had bought a property insurance i.e., office insurance, which it now planned to extend to its Pune office also. He asked his insurer who offered a new property insurance policy for new office to R.S Associate.

Considering how vulnerable the city to terrorism, R.S Associate paid extra premium to get coverage against terrorist activities under property insurance.

While, the policy promised to offer coverage in case of terrorism 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?

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 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 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 duly filled claim form, complete account of the accident, etc.

The terrorism activities spread terror among employees of R.J Associate, who did not attend the office for the next 10 days. Sadly, 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 theft.

Here though, the property insurance policy covered terrorism attack, it did not cover theft which happened after terrorism.

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