Insurers offer limited coverage for terror attacks

The world recently woke up to the gruesome news of a terrorist attack in Paris, one of the most visited places on earth. Security and intelligence agencies are not ruling out a similar planned attack in other parts of the world, including on Indian shores. Opting for an insurance plan that covers terrorist attacks looks more relevant now than ever before.

In general insurance, however, a lot of ambiguity persists when it comes to coverage of losses arising out of terror attacks. Most general insurance plans like travel insurance, home insurance, and enterprise insurance have restrictions. Plans that offer terrorism are often selective in their coverage.

Insurers' definition
Insurance companies have a clear definition as to what constitutes an act of terrorism or terrorist attack. 'An act that causes any kind of physical violence where there is a loss of life or property' is deemed as a terrorist attack. Usually, all attacks that are carried out by either individuals or a group of people together to weaken any established government are included in it.

ENSURING PROTECTION

• While terrorist attacks are covered, most policies exclude biological, chemical or nuclear attacks
• The scope of coverage for financial loss from terrorist attacks depends on the policy
• To cover loss or damage to property, one may need to pay an additional premium, as this will be treated as an add-on cover
• Hospitalisation expenses for terrorist attacks victims are covered by travel and health insurance
• Most insurers cover terrorism as an add-on cover, only with additional premium payment

Any damage or loss that a person may suffer due to a routine law and order issue may not necessarily come under the definition of a terrorist attack. Some insurance companies consider hijacking of planes, buses, and trains as part of a terrorist attack, while others consider it a law and order problem.

Travel insurance
Most travel insurance plans do not offer coverage for financial losses resulting from terror attacks. Only losses from situations like loss of passport or essential baggage, trip cancellation, medical expenses, repatriation of remains in case of an unfortunate demise, and expenses arising out of an extended stay are covered. Some may cover hijacking but it depends on the plan and the add-ons.

If you knowingly visit places that have a high chance of being targeted by terrorist attacks or terror-related activity, you may not get a claim towards any related loss. Also, the coverage offered by travel insurance plans is strictly restricted to the places on the insured's itinerary. Therefore, if someone takes a detour and is caught in any terrorist-related activity in a city or location not on the itinerary, the person's claim would get rejected.

Never ignore instructions from the officials in the country or city of your visit. If you had been instructed to stay indoors, but deliberately ventured out and are affected by any terrorist-related activity, your claim for any losses suffered would not be entertained.

If you are an avid traveller, it is ideal to opt for a travel insurance plan that offers protection against such volatile situations.

Terrorism cover
As instances of terrorist attacks have been growing, insurance companies have also started offering terrorism insurance as a separate standalone policy. A terrorism pool was developed in India in 2002, which is a combined effort of all general insurance companies. It provided help and cover for the losses caused during the 26/11 attacks in Mumbai.

This policy provides coverage to individuals as well as businesses for potential losses due to acts of terrorism. Any organisation - small or big - can be covered. This is highly recommended for public institutions like schools, colleges, universities, hospitals, hotels, and stadiums.

A standard feature stand-alone terrorism insurance offers is protection against financial losses out of property damage. An extended cover may also include claims for business interruption due to terrorist attacks.

Safeguarding from a terror attack

The best way to keep youself safe from any terror attack is to have adequate protection. Keep a balance between travel, health and personal insurance to make sure you are adequately covered both in India and on foreign soil. It will help you to take a right decision based on the contingency.

Go through the policy documents in detail before signing up, to understand the scope of its coverage, as most plans do not cover risks arising from terrorism. Always choose general insurance policies after evaluating their comprehensiveness.

Source: Business Standard