The importance of understanding terrorism insurance

Eight people were killed with a further 48 injured on the night of the 3rd of June when a white Renault van rammed into pedestrians on London Bridge. Three men then jumped from their vehicle and went on a murderous rampage before they were finally gunned down by police near the Wheatsheaf pub in Borough Market.

“A truly shocking event in the History of London which most people will probably never forget”

Just over four weeks later the people and businesses in Borough Market are starting the journey to return to normality; all be it with horrific memories of the tragic injuries and loss of life which, as far as the media goes, seem to have now been long forgotten.

So, in the wake of the Borough Market attack, Nigel Bailey from Wrightsure discusses the effect that these atrocities have had on the businesses affected.

The key question which I which to discuss in this article is how did insurance policies for the businesses affected in the Terrorist attack on the 3rd of June respond? 

To answer this, we must first understand what might actually be insured as, let’s remember, this it was a terrorist act and insurance policies typically do not include terrorism cover as standard.

A guide to terrorism insurance was recently published:-

Buildings & Property: In such a central location in London it would be hard to believe buildings insurance cover AND terrorism insurance was not in place for all properties.

Typically buildings in central London are owned by large corporations, pension funds or property moguls and their insurance programs would probably be on portfolio of hundreds of properties where terrorism insurance would have been arranged. However having read recent news articles the following quote suggests that many businesses were not correctly insured:

“Opening hours will be extended over the coming weeks to help businesses affected by the attack”

Nick Stokes, co-owner of Mediterranean stall Gourmet Goat in Borough Market, said his insurers have so far refused to pay up.

“There has been no empathy from them whatsoever as they keep finding loopholes. It’s quite hard to get insurance for this kind of stall anyway, because it’s not bricks and mortar. Public liability is easy, but the contents and business interruption insurance is really hard.”

Mr Stokes also confirmed a further complication around his and many other claims is that the attack has yet to be formally classified as terrorism. Another trader Mr Stokes knows has also had a claim for disruption and damage refused.

“A trader support fund has also been set up to help those who have suffered financially due to the market’s closure”

Business Interruption: Including cover for the interruption your business, sales and turnover could suffer, in the event of a loss, should always form part of your insurance programme.

Whether you have the basic cover for Increased or Additional costs through to full Gross Profit cover, serious consideration should be given to including this within your insurance programme.

Denial of Access (Non Damage): All Business Interruption policies have a material damage proviso which requires damage to property to occur before the Business Interruption policy can activate.

As with Borough Market, there are many businesses that could not access their un-damaged premises for 6 or 7 days due to the police cordon and damage to surrounding buildings. Without Denial of Access included with a non damage extension within their Business Interruption policy, they would have no cover.

Sadly, it seems that many businesses in and around Borough Market didn’t have Business Interruption insurance and if they did Denial of Access and Non Damage Denial of Access was not included on their Business Interruption policies.

Terrorism Insurance: All Insurance policies automatically exclude War, strikes, civil commotion and terrorism in their default wording.

So for businesses to have Terrorism insured under their insurance programme, separate cover needs to be arranged to ‘write back in’ terrorism under their insurance policy.

Sadly it seems for many of the Borough Market businesses there is just no insurance cover leaving their businesses on the good will of the local community.

Serious consideration should be given for your own business insurances to insure the following points if you wish to avoid your business from being left uninsured:

•  Make sure you have Terrorism insurance included within your Business Insurances.
•  Make sure you have the Denial of Access extension included within your Business
…Interruption policy.
•  Make sure you have the Denial of Access Non Damage extension included within your Business
…Interruption policy.
• Review your sums insured with your Insurance Broker to ensure they are up-to-date, accurate and
…correctly reflect replacement value.
• Ensure that your Disaster Recovery Plan is up-to-date and current

As with all insurance matters, speak to your Insurance Broker for advice and guidance and make sure that the risks your business face are either insured or well managed. Most importantly, make sure your business uninsured like so many of the Borough Market businesses.

Article submission by Nigel Bailey, Wrightsure, Stockport.