Which insurances cover terrorist attacks?

The alert level in Belgium and in Brussels in particular has been raised by the recent terrorist attacks and threats.
Prevention is therefore the top priority. But what if an act of terrorism occurs and your company is the victim? How is the damage to your staff, your visitors and property compensated? And to what extent can you be held liable? How do you insure your company against a terrorist attack?

Which insurances cover terrorist attacks?

What does Belgian law say?

For Belgian risks, coverage of damage resulting from terrorism* is required for the following types of insurance:

  • Automotive civil liability insurance;
  • Property civil liability insurance for fire and explosions;
  • Common risk fire insurance (e.g. for homes and small businesses);
  • Accident-at-work insurance;
  • Accident insurance;
  • Life insurance.

The question of whether damage is effectively the result of a terrorist action, or whether a particular event satisfies the legal definition of “terrorism” is decided by a committee consisting of representatives from a government body and the insurance sector.

Insurers can join the TRIP (Terrorism Reinsurance and Insurance Pool), where victims of an act of terrorism are compensated on the basis of the solidarity principle between the (re-)insurance industry and the Belgian government. Under TRIP a compensation limit of 1 billion euro per year applies to all claims resulting from acts of terrorism.

Similar pools exist in many other countries:

  • The Netherlands: NHT
  • France: GAREAT
  • Germany: Extremus
  • Spain: Consorcio
  • Denmark: DTIS
  • UK: Pool Re
  • United States: TRIA
  • Australia: ATIA

Insurers who are not members of TRIP must compensate the damage caused by terrorism in accordance with the provisions in their insurance policies.

If your employees are victims of a terrorist attack at your company, during the home-office commute or elsewhere in Belgium where they are commissioned by your company, they will receive a payment from the Accident-at-work insurance.
An accident caused by terrorism and occurring “during” the performance of the employment contract is always automatically considered to have occurred “as a result” of the act of implementing the employment contract.

Temporary and permanent disability, death and medical expenses are covered. Psychological support can also be offered.

The compensation remains subject to the legally determined compensation base rate under the Accident-at-work insurance. The global compensation limits set by TRIP do not, however, apply.

Coverage in common law (e.g. surplus, private life) are subject to the TRIP compensation limits.

What if my staff are kept hostage?

The Accident-at-work insurance will intervene in cases of permanent and temporary invalidity, death, medical expenses and psychological support. Compensation for ransom or support in negotiations is not provided in this policy.

If the demand for ransom or extortion is directed at the company (policyholder), Kidnap & Ransom insurance offers a solution. The policy covers not only the ransom, but also the costs of specialised consultants to guide the negotiations.

Your visitors

Where visitors are present at your company on the instructions of their employer at the moment of a terrorist attack, they will be covered under the Accident-at-work insurance of their employer.

If the terrorist attack occurs at a company or facility, which has spaces that are accessible to the public and are covered by the KB [Royal Decree] of 28/02/1991, the Property Liability after Fire & Explosion insurance that is required by law can contribute. Bodily and material damage that visitors have suffered after fire or explosion is compensated in this way.

Moreover, a company or facility with an increased risk due to, among other factors, their nature or location (e.g. an institution in the diamond district in Antwerp, an office in the European district in Brussels) can opt to take out accident insurance for their visitors.

Your assets

Most fire insurance policies for special risks exclude material damage as a result of terrorism.

Cover for this can be purchased via separate Terrorism & Sabotage insurance. This type of policy compensates material damage and related loss of profits. This is because if an act of terrorism causes material damage affecting your business, it is also likely that trading activity will cease or be hindered for some time, resulting in a loss of turnover.

This type of insurance is often taken out, but definitely not by all businesses. Some companies are at greater risk from terrorism than others, for example due to the sector in which they operate (e.g. transportation and storage of raw materials), the nationality of their parent company (e.g. American companies) or their location (e.g. close to a terrorist target, in major cities).

Due to the growing threat of terrorism, investors are increasingly demanding that an insurance policy of this type should be in place before they finance high-risk projects.

Your liability

What if third parties (e.g. neighbours or passers-by) encounter material or physical damage due to an act of terrorism at your company and hold you liable?

Damage to third parties by terrorism is typically excluded under Civil Liability insurance for companies. Your business will also not be held directly liable for the attack. Indirect liability can arise, if it is shown that your company has not complied with specific safety measures.

As noted previously, claims of this sort can be arranged in specific circumstances under the Property Liability after Fire and Explosion insurance**.

In exceptional cases, a repurchase of cover (or an exclusion) for terrorism can be negotiated under the company’s Civil Liability policy.

*Legal definition: Terrorism is a clandestine organised action or threat of action with ideological, political, ethnic or religious aims carried out by an individual or group, whereby violence is perpetrated against persons or where the economic value of a material or immaterial good is entirely or partly destroyed, whether to make an impression on the public, to create a climate of insecurity or to place a government body under pressure or also to impede traffic or the normal operation of a service or company.

**Where the KB [Royal Decree] of 28/02/1991 applies to your organisation.

Dominique De Clercq

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