A Primer On Terrorism Insurance:
What is terrorism insurance?
Terrorism Insurance is an insurance product that is purchased by property owners to get coverage for the potential losses or liabilities that may occur in the event of any terrorism activities. Typically, terrorism coverage comes as a part of the personal accident polices and most health and life insurance and even some of the home insurance policies offer terrorism coverage as part of their package.
Typically, most insurance companies in India consider the terrorism coverage as a difficult product since the activities or terrorism are difficult to predict and potential loss it can cause can be huge. The uncertainty factor combined with the huge loss potential make it difficult for the insurance companies to set the premium amount.
Salient features of terrorism insurance cover:
Typically, the terrorism coverage is taken as the additional add-on over the existing insurance policy by paying additional premium.
The insured has the option to choose the sum insured and the coverage for business interruption and material damage.
The maximum benefits provided against the loss vary for different insurance companies.
The premium amount charged for the terrorism insurance is calculated based on the risk occupancy and the sum insured.
Terrorism insurance does not allow mid-term inclusion.
You can buy terrorism insurance coverage only in conjunction with your engineering for property coverage.
Terrorism insurance coverage in India is a lot different from the terrorism policies in some of the advanced countries like USA. India the Indian Insurance Companies have created an autonomous terrorism insurance pool, which is a corpus of funds that are gathered by all insurance companies to pay for the peoples loss resulting from terrorist activities. This terrorism pool makes the Indian terrorism coverage different from the coverage provided in other western countries, in western countries the insurance companies had to depend on the government administration to set up a terrorism pool to compensate the loss suffered by the people.
What is Terrorism Pool?
As per the IRDA (Insurance Regulatory and Development Authority) mandate, the General Insurance company maintains a pool of terror insurance funds to the tune of Rs. 1,200 crore. The Terrorism pool was first set up in 2002 with Rs. 200 crore and it covers companies for a liability of 750 crore that includes coverage to material and property loss. However, the coverage is only for major institutions so if you want an individual cover you need to get it as an add-on with your existing insurance cover.
Future of Terrorism Insurance in India:
With the growing attacks of terrorism in common places across India, this insurance is becoming popular among both business owners and common people. Terrorism affects everybody equally so to get compensated for their loss people would surely opt for this insurance coverage.
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