Acts of terrorism present a continuing threat in the UK and it's important to understand the potential insurance implications. Deacon's main business is providing insurance services to residential management companies and managing agents and we find that Terrorism insurance is not always fully understood.
Is it just your choice whether to insure or not?
Under the terms of the freehold, leasehold or mortgage agreement it may state what must be insured for as a minimum. Older agreements may pre-date changes in the terrorism rules, therefore when stating they require 'full insurance' this is likely to include terrorism; newer agreements may be more specific on this. If you are obliged to insure and fail to do so, not only will any loss not be insured but the directors could be held personally responsible for the loss.
Are you in a target area?
Perhaps you don't consider your property to be in a target area; for instance near to Government premises, prestigious buildings or close to mass-transit or utilities infrastructure. Residential areas aren't normally a target but it is worth considering where for instance, a bomb might be assembled and how it might travel to its intended destination. These activities often take place in low profile, unobtrusive places and an explosion could be unplanned.
What does "terrorism" mean?
Most people naturally associate terrorism with political acts linked to overseas events. Insurers usually define terrorism in a broader way that can include other groups with environmental or animal rights agendas; people whose aims you might support but whose methods you abhor.
It's worth considering whether there's a risk such activities could be planned, or occur in, residential areas. Could one of your residents be a participant or even a target - a CEO of a biotech company involved in animal research or a politician opposing the extremists' views perhaps?
What to do now
Assessing the full extent of the risk is difficult; the probability of a terrorism act is small, but the consequences are potentially catastrophic.
We recommend you:
- Check your policy - do you have cover?
- Check the legal agreements - are you required to insure for it?
- Obtain a quote and discuss with your fellow directors and members.
- Make sure there is a consensus if you decide not to insure, fully-documented to protect your position as a director of the residential management company.
Did you know...?
We can provide terrorism cover for blocks of flats
That's the Deacon difference!
For a summary of cover please see our Terrorism cover Fact Sheet