Terrorism Insurance

Terrorism insurance is a specialist policy that can help protect you against damage caused by terrorist acts.

What is terrorism insurance for flats?

Terrorism insurance for flats is a policy that can protect property owners from losses in the event of a terrorist attack. It can also protect against damage and cover the financial impact of an attack.

Why you might want to consider terrorism insurance

Many people who own blocks of flats don’t buy this insurance because they think they’re not at risk, but this isn’t always the case. For example, in the “Qdime case” (July 2014), the court decided that if your lease requires insurance against explosions, it should also cover terrorism.

Even though a terrorist incident might seem unlikely, the financial losses without insurance could be huge, making it a risk that might not be worth taking. Without terrorism insurance, you could face significant financial losses if your property is damaged or destroyed in an attack. Beyond the physical damage, there are potential costs for alternative accommodation, loss of rent, and business interruption to consider, all of which can be covered by a terrorism insurance policy.

What terrorism insurance can cover

The policy can provide you with cover against the following:

• Damage to buildings caused by terrorist action: Can cover damage to buildings caused by terrorist activities up to the policy sum insured.
• Loss of rent or alternative accommodation costs: Can cover loss of rent or alternative accommodation costs if the property becomes uninhabitable due to damage from a terrorist incident.
• Non-damage denial of access: Can cover alternative accommodation costs if access to your property is denied due to a terrorist incident, even if the property itself isn’t damaged.
• Debris removal and clean-up: Can cover the costs associated with debris removal and clean-up after a terrorist incident.
• Business interruption: Can cover financial losses due to business interruption resulting from a terrorist incident.

These are brief product descriptions only. Please refer to the policy documentation paying particular attention to the terms and conditions, exclusions, warranties, subjectivities, excesses and any endorsements.

Considerations of terrorism insurance

When evaluating terrorism insurance, there are several key factors to keep in mind:

• Lease or mortgage requirements: The lease or mortgage agreement terms may specify the minimum insurance cover required. Older agreements, particularly those that predate the changes in terrorism insurance rules in 1990, might include terrorism coverage under “full insurance.” Newer agreements are likely to be more explicit about this requirement.
• Compliance with legal obligations: If your lease mandates terrorism insurance and you don’t have it, any loss due to terrorism might not covered. The property’s directors could also be personally responsible for the resulting financial loss.
• Risk of uninsured losses: Without terrorism insurance, you could risk significant financial loss. Damage caused by terrorist activities is generally excluded from standard property or block of flats insurance policies. This means that in the event of an attack, you may have to pay the total cost of any damage.
• Peace of mind: Having terrorism insurance can help to provide peace of mind, as you know your property has protection, which can be especially important in areas at higher risk.

Are terrorism insurance policies mandatory?

Terrorism insurance isn’t mandatory for every block of flats. It depends on your lease, so it could be worth checking before taking out a terrorism insurance policy. Remember, if you don’t have terrorism insurance and your property is damaged or destroyed in an attack, a standard property or block of flats insurance is unlikely to cover it.

Why choose Gallagher for Terrorism Insurance

We work with you to understand the nature of your work and the risks you face. That way, we can develop a policy that meets your specific requirements.

• We offer standard cover plus optional extras.
• We cover properties of standard construction, converted properties, listed buildings and purpose-built blocks.
• Our specialist claims advisors provide step-by-step support from first notification to claims settlement.
• We provide a 24-hour first notification of loss claims service, so you can report a claim any time of day, 365 days a year.

For a copy of our guide to Terrorism insurance, the cover provided under a standard policy** and examples of how the cover could benefit you, click here.

*Qdime Ltd –v- Bath Building (Swindon) Management Company Ltd Various lessees of the Bath Building (2014) UKUT 0261 (LC). 
** For full terms and conditions please refer to the policy wording available on request. For Residential Management Committees in small blocks it is normally best for simplicity and costs to extend your block policy to include this cover. If you are managing a large block then a standalone policy from a specialist insurer may save you money. As with all insurance policies, the policy is subject to limits, conditions and exclusions. For more information please contact us to discuss further, or request a full summary of the cover or the full policy terms and conditions. The opinions and views expressed in the above article are those of the author only and are for guidance purposes only. The authors disclaim any liability for reliance upon those opinions and would encourage readers to rely upon more than one source before making a decision based on the information.

Frequently Asked Questions

Please note that these Frequently Asked Questions are not a substitute for the policy wording. For full terms and conditions please see the policy documentation.

What if I can’t access my property?

If your property hasn’t been damaged but you can’t access it due to a “non-damage denial of access” resulting from a terrorist incident, a terrorism insurance policy can cover alternative accommodation costs so you have a place to stay, even if your property is physically unaffected but inaccessible.

How can I make a terrorism insurance claim?

If you need to make a claim , contact our friendly and experienced UK team. Our in-house specialists are on hand to make your claims experience simple and seamless.

Could I be liable if I don’t include terrorism insurance?

By adding a terrorism insurance policy when arranging or renewing your flats insurance, you can help protect you and your fellow freeholders’ and leaseholders’ assets. Failure to include this coverage could leave you personally liable for any damages caused by terrorist actions, potentially resulting in significant financial loss and legal consequences for all involved parties.