LEGAL


Is your business insured against an act of terrorism?


The unprecedented nerve agent attacks in Salisbury earlier this year left many chain and independent shops restricted from the public for months. The impact on small businesses has been crippling, with Government forced to spend almost £1.4m to prevent business closures and safeguard local jobs. Bryan Banbury (pictured), Managing Director at Nottingham’s largest insurance broker Russell Scanlan, explains more.


When most businesses think about the type of insurance cover they need, protection against an act of terrorism isn’t high on the list. Many think it’s not something that will ever apply to them; after all, why would a terrorist attack a small coffee shop or independent gift store? Others, wrongly, assume that in the unlikely event of an attack any damage to their business would be covered on their standard policy. Both of which mean that their business is highly vulnerable should the worst happen. In the past ten years the nature


of terrorist threats has changed greatly, with terrorism now causing more loss of life and economic impact than traditional property damage. With the frequency and range of attacks increasing, businesses need to ensure that their cover is fit for purpose and offers the right level of protection to cover all eventualities. In the past, terrorism insurance


has covered business interruption caused by damage to premises – mostly geared towards the use of explosives in large scale attacks. However, businesses do not always have to be the direct target to be financially impacted by an event. With more events involving the use of handheld weapons and vehicles to cause human casualties; businesses must consider more than the direct effects of physical damage. Personal injury, potential liability


claims from staff or customers, and indirect effects on their business, such as temporary closures or a decline in visitors and customers, are also critical issues. Attacks such as those in Salisbury often result in businesses being forced to close for long periods of time despite no actual physical damage, this is known as denial of access and is not covered by a number of standard insurance policies.


The nerve agent attack in Salisbury had a huge impact on its businesses


Retail, hospitality and


entertainment businesses are particularly vulnerable to losing out in this way. In fact, reports show that the five terror attacks that took place in the UK in 2017 – at Westminster, Manchester, London Bridge, Finsbury Park and Parsons Green – potentially led to a loss in economic output of €3.5bn. Trade in Salisbury is down 12%, with local bed and breakfasts reporting a 40% fall in visitors in the aftermath. It’s estimated it will take up to two years for the tourist destination to recover completely. While the evolving nature of


terrorism incidents brings a whole new set of risks and exposures, insurers are now beginning to address this, with policies providing a range of cover; including non- damage business interruption, denial of access, and loss of attraction – without related property damage. While the devastating effects of


terrorism will still cause huge upset and trauma to victims, these changes will bring some much- needed protection for vulnerable business owners. What’s important is that business owners are checking their policies carefully, to ensure that they are suitably covered against all possible impacts on their business.


business network November 2018 65


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