Insurers divided over cover for terror attacks

MUMBAI: The terrorist attacks in Mumbai have made many wonder if they are covered under their existing insurance policies for such eventualities. There is no one answer to this question and things vary from product to product.

A retail insurance buyer would typically buy products from both life and non-life insurance companies. On the life insurance platform, insurers pay the sum assured for basic life insurance in case of death due to reasons other than suicide.

In most life insurance products, the basic sum assured is paid to survivors in case of death of the insured due to any reason other than suicide in the first year. A life insurer may refute the claim on the grounds of ���non-disclosure��� of material information. In other words, life insurers pay the basic sum assured even if the death takes place due to act of terrorism.

However, things change when it comes to benefits under the additional riders bought by policyholders. Life insurers do not pay double-accident benefit if the death occurs due to act of terrorism or war, as it is one of the chief exclusions mentioned in the policy wordings.

Major surgical benefit covers only stipulated surgeries and hence no benefit is payable if a policy holder undergoes surgeries arising out of an act of terrorism. Terrorist acts do not fall under the purview of the critical-illness cover. ���Waiver of premium benefit is allowed if the insured dies due to act of terrorism,��� says Rahul Agrawal, CEO, Optima Insurance Brokers.

For non-life insurance cover, the industry is divided on allowing benefits in case of act of terrorism for individuals covered under personal accident policies.

���Most non-life insurers exclude disability or death arising out of war or act of terrorism,��� Mr Agrawal said, adding, ���there is no provision to add terrorism cover to the existing personal accident insurance cover.���

���Though there are some non-life insurers offering ���terrorism cover��� under policies, it makes sense to confirm the same by checking the list of exclusions,��� says a veteran actuary with a public sector insurer.
For property cover, the terrorism cover is optional.

���Prospective policy buyers would be better off comparing the benefits, including the terrorism cover, while buying the property insurance, ��� warns the actuary.