Against the backdrop of an official terrorism threat remaining at ‘substantial’ UK-wide, according to MI5, a new insurance policy is offering businesses the peace of mind of protection that not only steps in if their premises are damaged by an attack, but also where there is business interruption without any physical damage.
As your insurance risk advisor, we can now access an insurance policy plugging a significant gap in most terrorism insurance policies. It offers automatic cover for two scenarios typically occurring within a terrorism arena – denial of access and loss of attraction – if the policyholder insures their commercial gross profit, or their gross revenue, as a sum insured.
Non-damage denial of access is an emerging risk across the UK, with an additional ‘severe’ level threat in Northern Ireland, from Northern Ireland-related terrorism. Denial of access occurs when the authorities close off an area, to carry out investigations, as occurred following the London Borough Market terror and Salisbury Novichok attacks. Both the business and its customers are denied access and so takings, sales, orders and footfall plummet. Damage to a building is not necessary for such impacts to be felt.
...terrorism insurance policies only offer such cover as an extension to standard cover or, alternatively, limit protection to denial of access alone.
Loss of attraction cover comes into play when a business, not directly affected by a terror attack, suffers losses because the public becomes nervous about a certain location, type of business, or activity. For example, an attack on a Christmas market may encourage UK visitors to cancel trips to other markets, causing losses for tour operators, bars, cafes and restaurants, street food retailers, and many others, who had relied on its Christmas footfall. Loss of attraction protection effectively covers what could be described as an attack’s ‘knock-on’ effects.
Many other terrorism insurance policies only offer such cover as an extension to standard cover or, alternatively, limit protection to denial of access alone. They do not consider any ongoing losses once a cordon lifts and may only provide loss of attraction cover if physical damage has occurred. Some policies define the type of property that must be attacked before loss of attraction cover operates.
The policy we can offer clients covers acts of terror inspired by political, religious or ideological motivations and does not depend on Her Majesty’s Treasury declaring an incident a certifiable act of terrorism. It is not confined to losses incurred in England, Scotland or Wales, providing protection for overseas assets too, and can cover multi-location exposure via a floating first-loss sum insured. It can benefit all sorts of commercial businesses, plus property owners who could lose rent, or have to move to alternative accommodation, and fleet operators who could suffer vehicle damage and income-earning impacts.
Terrorism is, unfortunately, a risk unlikely to go away. Nobody can predict where the next incident will occur, or what the repercussions will be as consumers then make judgements on what it is safe to do. This policy helpfully takes into account the changing nature of terrorism, covering both incidents caused by a lone wolf and acts of sabotage, as well as traditional terrorism exposures.
If you recognise terrorism could directly or indirectly affect your business, act now. We can quote in around 48 hours, so please get in touch to discuss your concerns and requirements