Newspaper article The Journal (Newcastle, England)

Risks Posed by Terrorism

Newspaper article The Journal (Newcastle, England)

Risks Posed by Terrorism

Article excerpt

Byline: By Andrew Nixon

Since the terrorist attacks of September 11, 2001, the country has remained on high alert against acts of terrorism.

With March being the month of insurance renewal for many commercial properties, the attention of landlords and tenants may now be drawn towards the issue of terrorism cover.

A typical commercial lease usually contains provision that if the premises is damaged or destroyed by an uninsured risk, the rent suspension provisions will not apply, and depending on how the tenant's repairing obligation is drafted, the tenant may be required to re-instate the premises at their own expense.

Tenants will, therefore, wish to pay particular regard to the provisions relating to uninsured risks when negotiating a lease or when the landlord renews insurance cover.

One problem encountered in recent years has been that terrorism cover may simply not have been available.

This position has been less of an issue since the establishment of the Pool Re insurance company (set up by the insurance industry in the wake of IRA activity in the 1990s).

Pool Re was established to provide re-insurance cover for certain forms of damage caused by terrorist attacks, which may have been excluded from primary insurance policies.

Many insurance companies responded to this by excluding cover for any terrorist activities already covered by the Pool Re scheme, with a proviso that the landlord could pay to have this exclusion lifted.

The problem has been that "terrorism" under the Pool Re insurance cover is much more narrowly defined than the definition used by most of the primary insurers, and this has led to an `insurance gap'.

Landlords would be well advised to check the exact wording of their insurance policy in respect of their terrorism cover to ascertain exactly which types of terrorist activity they are actually insured against. …

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