A traditional terrorism policy within the UK operates in the event of physical damage to premises as a result of a terrorist attack, targeting loss of life and creating fear and panic.
However, terrorism in the UK is evolving – The changing nature of more recent attacks can cause significant disruption to businesses located in the vicinity of an incident, even if the business has not been directly targeted in the attack.
This means businesses in the vicinity of such attacks will suffer, whether or not they incur physical damage, for the time the area is cordoned off by the police.
Denial of Access covers loss sustained during the period of time when access to your property is prevented. The trigger is physical damage and insurers commonly apply a radius to the impact area to include in the coverage. Policy extensions for aspects like Denial of Access following an act of terrorism are therefore important coverage to consider.
A broader form of Denial of Access Business Interruption cover is when there is no physical damage policy trigger but either a lock-down or a certified threat to a particular area occurs.
Meanwhile, Loss of Attraction may occur where there has been no direct damage to a business’ premises or where there has been no physical damage at all. A loss of turnover or revenue resulting from a physical loss to a property in the vicinity of the premises or as a result of a non-damage/threat type event can be significant. If there is a closure of an important landmark, airport, transport hub or of a particular place where large numbers of people come together (for example, a shopping mall, theme park or nightclub) a reduced number of visitors will result. Industries which are particularly exposed are retail, hospitality and leisure.
While terrorism can occur anytime and anywhere, any size of business can suffer, either directly or indirectly. Businesses located in large urban areas should be even more concerned.
The potential cost of future terrorist attacks is now every bit as great as the physical loss of buildings.
If you would like to discuss terrorism cover in more detail please speak to your usual contact at ProAktive.
By Sam Geddes Cert CII – Commercial Account Handler