Terrorism and Travel Insurance
WORLDWIDE | Thursday, 27 November 2008 | Views [1521] | Comments [3]
Five minutes ago one of the senior staff at WN asked me to define terrorism for our customers in simple, easy to understand words so that they would know when a policy covered them and did not.
I immediately shrunk back in my seat because the simple answer here (unlike most parts of a modern personal insurance policy nowadays which are self explanatory) is that there are no simple answers.
To give a little background to the problem up until 9/11 most personal insurance policies included the risk of terrorism automatically. The attack on the World Trade Center spread losses throughout the insurance industry and many kinds of policies were affected outside the insurance on the buildings themselves. Some insurance covered the attack, some didn't and lots of clients were in court for a long time while the issues were settled because there were many different clauses and definitions.
Insurers realised that their exposure to a terrorism event could be massive and had to exclude the risk of terrorism (often along with the associated risks of civil commotion, unrest and insurgency). It was also necessary to tightly define what was or was not a terrorist event. The lawyers at the various insurance companies, markets and international agencies like the OECD spent many years on this prickly issue.
Most travel insurers now exclude terrorism with a clause that will probably go something like this in their General Exclusions (exclusions which affect all the sections of a policy); You are not covered for anything caused directly or indirectly by the following: Any consequence whether direct or indirect of war, invasion, act of foreign enemy, hostilities (whether war be declared or not), discharge, explosion or use of a weapon of mass destruction whether or not employing nuclear fission or fusion, or chemical, biological, radioactive or similar agents, by any party at any time for any reason, terrorist activity, civil war, rebellion, revolution, insurrection, blockade, military or usurped power.
As you can see the lawyers have done their homework here and pretty much any claim arising from any of these issues is excluded.
As an added problem for customers, the words 'any consequence whether direct or indirect' means that an event that does not include explosions or gunfights can cause a claim to be excluded; for example airlines cancelling flights because a security incident fifty miles away shuts down an airport.
On a slightly happier note most developed governments now have plans to assist business and travellers during and after a terrorist incident and travel companies have similar contingency plans which do not include private insurance.
The problem of finding insurance for travellers which include this terrorism continues to be a serious one for small companies and private individuals, however I know that www.cerberusrisk.com are now offering policies online which include cover for these events as standard.
To conclude, my personal advice is to always read every insurance policy to make sure that it is right for you and to ask for assistance from a professional advisor if you need anything explained or more specialist cover.
Graham Kingaby
Travel Insurance Director
WorldNomads.com
Tags: terrorism and travel insurance, travel insurance, special risk travel insurance, terrorism cover, worldnomads.com, world nomads, cerberus risk
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