Life Insurance Offers Limited Defense Against Terrorism

 Life Insurance Offers Limited Defense Against Terrorism

The City of London Police Commissioner James Hart's recent remarks that it's "a matter of when, rather than if" there would be terrorist strikes in London's financial district will exacerbate already grave worries about the safety of people's and businesses' finances.

According to Mr. Hart, "if you want to hurt the government, hurt people at the same time, and you want to cause maximum disruption...where better to hit than at the financial centre?"

Additionally, Mr. Hart reaffirmed a research released by the insurance company Axa, which cautioned that less than half of small businesses lack a plan to guarantee their viability in the event of an emergency or natural disaster. Axa pointed out that a lot of companies, particularly in the South East danger zone, are not even insured against common risks like fire and flood, which are far more likely to affect a company than the increasingly well-known concerns of terrorism.

According to Axa's research, nearly one in five small to medium-sized enterprises had experienced a disaster, and 5% of them needed more than a year to rebuild their companies. If the Commissioners’ warnings are ignored, any business that does not have insurance against future calamities could lose a lot of money, or possibly go out of business.

In light of the terrorist assaults, emergency services workers are now feeling more concerned about their financial security. Recently, fire fighters in Somerset briefly canceled their planned walkout due to concerns that their insurance may not cover them in the event of terrorism. Previously, Union members had decisively voted in favor of conducting industrial action, short of a strike, by refusing to train on specialized equipment that can be utilized in the event of a terrorist incident. This vote was cast via postal ballot. The actions have been postponed until after the end of the month, in anticipation of a report from a working team that the Somerset Fire and Rescue Service appointed to examine the personal insurance policies of the firefighters.

"Somerset fire crews want our employers to address our very real concerns and this gives an opportunity for them to do so," stated Adrian Woollaston of the Fire Brigade Union's Somerset chapter.

The limitations included to many group life insurance plans that prohibit payouts in the event that the policy bearer is hurt or killed as a result of a terrorist act are the main source of concern for the firefighters.

In an effort to comfort emergency personnel who might pass away as a result of terrorist acts, the Association of British Insurers (www.abi.org.uk) has stated that "exclusions do not generally apply on stand-alone life assurance policies, regardless of the policyholder's occupation." However, they also point out that "other personal insurance cover," such as critical illness cover, mortgage protection, income protection, and personal accident, is typically subject to exclusions.

In the event of a terrorist attack, this would imply that many insurance policies that emergency personnel currently possess to safeguard their future and those of their families—such as mortgage payment protection—might not offer any coverage.

While pricing comparisons and guidance may be found on websites such as Moneynet (http://www.moneynet.co.uk) and Moneyfacts, searching through all the insurance policies available can be helpful, more work needs to be done.

"We are asking all insurance companies to look at their policies and if they have such exclusion clauses to drop them," Unison's Sam Oestreicher stated.

Many consumers would rather not read the many intricate provisions that are inherent in financial insurance, but as the firefighters are currently discovering, it is crucial to make sure the protection is there.

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