UNCOVERING COVERAGE: WHAT TERRORISM & POLITICAL VIOLENCE INSURANCE REALLY PROTECTS

Throughout the insurance industry, a high percentage of risk managers & brokers still tend to ignore or 'forget' about Terrorism & Political Violence Insurance because they do not believe it is relevant to them. Many insureds believe their insured assets are safe from Terrorism or Political violence type events. But do you really know what is covered and are your assets as benign as you think?

The aim of Resilient Frontiers is to help all stakeholders within the chain of risk transfer to better understand this product line in an ever-changing environment.

Today we will look at the very basics of the Terrorism & Political Violence product and go through the perils covered.

The most basic form of cover is the Terrorism and Sabotage Perils, which kick-started this product as a stand-alone line of business following 9/11.

Next up is the Strike, Riots, Civil Commotion and Malicious damage perils, which are often not excluded within an all-risk policy and therefore covered. However, we are increasingly seeing the All Risk market excluding these perils from cover due to the increase in SRCCMD type events. A common misconception when buying SRCCMD as a standalone product is that damage caused by workers/employees during a Strike or Riot type event is not covered, however this is categorically NOT TRUE and IS covered under this coverage type.

The next step up is the political violence perils, which include Coup d'etat, Rebellion, Revolution, Mutiny, and Insurrection, Civil war is also included within this band of perils.

War is the last step on the pyramid of perils, being the broadest peril.

Counter Insurgency (or loss control) can be covered as standard under some wordings

The underlying perils are included when the broader peril is purchased. It is recommended to maintain the underlying perils as a risk could evolve from one peril to another, and therefore the proximate cause of a loss could be difficult to pinpoint. By having all underlying perils covered, it is a more comprehensive form of cover, covering all eventualities. This is especially important when considering the SRCCMD/Political Violence perils. Let's say you have the SRCCMD perils covered under an All Risk policy and the wider PV perils included under a standalone Terrorism and Political Violence policy. If a security situation evolves from a rioting event to an act of Revolution, it could become tricky to establish which policy responds to what. Therefore, it would be beneficial to purchase a fully comprehensive standalone Terrorism & Political Violence policy.

Of course the broader the peril there is an increase in premium

It is important to note an insured peril property damage trigger is required for a policy to respond. Business Interruption and other extensions can also be covered following a PD trigger to mirror an all risks policy.

Join us next time as we delve deeper into the world of Terrorism & Political Violence Insurance. If you found this content useful, please feel free to share our content and follow us on our social media channels

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