Terrorism is a world-wide phenomenon. On the morning of 22nd March 2016, 3 coordinated nail bombings occurred in Brussels claiming 34 innocent lives and leaving over 300 people injured.
India has been witness to its own brand of terrorism for decades. Countless innocent lives have been lost to appease the alter egos of radicals both national and international. Terrorist groups look for soft targets (public places like railway stations, airports, schools, offices, stadiums, hospitals etc.) to spread fear. Ironically, the loss of life occurs to heterogeneous masses; the explosions do not seem to discriminate against religion/nationality/cultural affiliations at that point.
After 9/11, the international re-insurers withdrew their terrorism cover. All non-life insurance companies in India formed “The Terrorism Risk Insurance Pool” to pay claims arising out of terrorism.
After 26/11 Mumbai attacks, India Inc. braced the importance of a terrorism cover—the total loss was estimated at $ 113 million. (It is the 13th costliest terrorist attack in the world by insured property losses).
Although, when the next attack may take place is unknown, it is important to take necessary precaution. In this article, we explore the risk of terrorism vis-a-vis insurance.
Life Insurance (Term Insurance):
A term insurance is the cheapest form of insurance and covers the risk of death only. There are no survival benefits. As a thumb rule, all the 24 life insurance companies operating in India should pay the nominee, the sum assured, on the death of the life insured due to a terrorist attack. Moreover, the policy covers death across the globe.
Personal Accident Policies:
Personal accident policies cover the risk of death or disablement caused due to an accident across the globe. An accident may adversely affect the earning capabilities of an individual. The policy wordings of HDFC Ergo’s Personal Accident Insurance Policy, defines an accident as “a sudden, unforeseen and involuntary event caused by external, visible and violent means”. It goes on to define Terrorism as:
Terrorism means activities against persons, organisations or property of any nature:
- That involves the following or preparation for the following:
- Use or threat of force or violence; or
- Commission or threat of a dangerous act; or
- Commission or threat of an act that interferes with or disrupts an electronic, communication, information or mechanical system; and
- When one or both of the following applies:
- The effect is to intimidate or coerce a government or the civilian population or any segment thereof, or to disrupt any segment of the economy; or
- It appears that the intent is to intimidate or coerce a government, or to further political, ideological, religious, social or economic objectives or to express (or express opposition to) a philosophy or ideology.
The policy above specifically mentions that, “The Company shall not be liable to pay any benefit in respect of any Insured Person for Bodily Injury caused by or arising from or as a result of Terrorism”. However, this cannot be said of other general insurance companies. Most of them didn’t have terrorism as an excluded peril in the policy document.
Health Insurance:
Health Insurance protects a family against financial contingency, arising on account of medical emergencies. Health insurance covers hospitalisation expenses, day care procedures, domiciliary treatment, ambulance charges, etc.
Most policy documents of general insurance companies are silent on the coverage of an act of terrorism. It is safe to presume that they cover it. Everyone excludes war, or any act of war including use of nuclear weapons / materials, chemical and biological weapons, and radiation of any kind. As per HDFC Ergo’s website, its Health Suraksha Plan excludes any claims on account of radioactivity or war or terrorist activities.
Travel Insurance:
Travel insurance covers medical emergencies, personal accident, compensation for flight delays, loss of baggage, personal liability, etc. Every travel insurance plan is unique and meticulous reading of the policy document is needed to affirm the coverage of a particular risk. E.g.: HDFC Ergo’s Travel Insurance covers Hijack Distress Allowance (upto the limits specified in the policy) but specifically excludes any bodily injury caused by or arising out of terrorism.
Home Insurance:
Home Insurance primarily safeguards the structure of the house along with the safety of its belongings. It insures the risk against fire, lightning, explosion, implosion, burglary, theft and larceny etc. Most policy documents of general insurance companies are silent on the coverage of terrorism. All policies specifically exclude war, or any act of war including use of nuclear weapons / materials, chemical and biological weapons, and radiation of any kind.
New India’s Householder’s Policy covers the risk of terrorism under allied perils, while HDFC Ergo’s Home Insurance Policy offers an optional terrorism cover.
Dear Reader:
At the risk of sounding repetitive, the best way to be sure is to read the policy document carefully before signing on the dotted line. Simply know this, if the policy excludes the risk of terrorism, you may request inclusion. The insurance company would increase its premium accordingly based upon their pre-defined underwriting standards. Consider your options today.
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