I was recently in an international business trip procuring supplies and services for my client when a bomb went off…., literally!
The explosion actually took place in the middle of the city near the hotel where we were going to stay.
I had to quickly make alternative arrangements for our itinerary and business plan. My thoughts also turned to the increasing level of risk in doing business internationally and whether we had the necessary insurance cover for such incidents.
With the global geopolitical situation and the prevalence of threats and random terrorism acts these days including in Australia, international business risk management is now as critical as ever.
Just think of the recent terrorism act in Canada and numerous terrorism events in 2016 including in France and Germany, Indonesia, the student riots in Hong Kong, the home grown terrorist acts in the US and the continuing threats of local terrorist incidents in Australia.
As a business and even for international travellers in general, risk mitigation and ensuring that you and/or your employees have the necessary insurance cover is now more essential than ever.
When I got back to Sydney, I discussed the incident with Gareth Jones from B2B Insurance and whether travel insurance policies in general provide cover for claims that arise from terrorism.
Gareth’s advice was not only enlightening but also served as a wake up call.
Is Terrorism Covered By Travel Insurance – Bad News
Here is the bad news and the good news when it comes to travel insurance and terrorism.
The bad news is most travel insurance policies do not cover terrorist related activities. “Yes folks, most of them do not provide cover” as my good friend Gareth Jones pointed out.
I suggest that you have a very good look at your travel insurance company’s Product Disclosure Statement (PDS) and/or seek professional advice from a licensed insurance specialist on your business requirements.
A common general exclusion is:
“You will not have cover for claims that arise as a result of an act or threat of terrorism for cancellation of fees and lost deposits, travel delay expenses or special events”.
A select few do offer limited cover but have restrictions on items such as cancellations and travel delays.
However, regardless of the level of cover, all of them will deny your claim if you travel to a country with a DFAT Level 3 or Level 4 advisory and experience a terrorist event.
DFAT Travel Advice
This is because most insurance companies consider the risk is too high for them to give you any cover in countries at Level 3 or 4.
The warning levels refer to the Australian Department of Foreign Affairs and Trade grades of travel advice. These are:
Level 1: Exercise normal safety precautions.
Level 2: Exercise a high degree of caution.
Level 3: Reconsider your need to travel.
Level 4: Do not travel.
You can check out DFAT’s website for a list of countries with Level 3 and 4 warning.
Travel Insurance – The Good News
Here are examples of insurance companies that cover terrorism acts. Better still consult a professional licensed insurance broker to get the best cover that fits your business needs.
They cover accidental death, loss of income, overseas medical, hospital, cash in hospital, dental and related expense as a result of an accident or terrorist act.
You are not covered however for any loss, injury, damage or legal liability sustained directly or indirectly by you if you are a member of a terrorist organisation. You are also not covered for cancellation fees and lost deposits that arise because of a terrorist act or any loss arising out of a military force to intercept, prevent or mitigate known or suspected terrorist act.
Cover for medical and evacuation expenses due to terrorism up to $100,000 per policy.
There are specialist insurers available through Insurance Brokers which can give full Terrorism and a limited war cover as well as Sabotage; Malicious Damage; Riots, Strikes and Civil Commotion; War; Coup d’état, insurrection, rebellion and revolution; and Chemical, biological, radiological and nuclear terrorism.
How About In Australia
In Australia, there is a specific legal provision whether an insurer is required to provide cover to a terrorist-related incident. This is very specific information so suggest you also quote your source for this!
Whether an insurer is required to cover a terrorist related incident depends on whether it is a declared or non-declared terrorist incident as defined by the Terrorism Insurance Act. If it is a declared terrorist incident then some insurers are obliged to meet claims for terrorism related incidents.
This was the case with the 2014 Lindt Cafe siege in Martin Place which was declared a terrorism related incident by the Australian government.
Finally, the Workers Compensation Act may also provide you and your employees cover if the incident happens at the workplace whether in Australia or overseas.
Terror related incidents are becoming more prevalent these days. As a result, you can expect insurers to become more stringent in relation to terrorism and travel insurance.
The important point here is whether you are travelling for business or pleasure, you have to make sure that your insurance provides the necessary cover for you and your employees in case of any eventualities.
PS. As it turned out, the area that we were going to had a Level 4 “Do not travel” advice from DFAT. So regardless of what travel insurance we had this would have been void. Suffice to say, I cancelled all travel plans to the area in the foreseeable future.
The above article is for general information only. It does not constitute as an official advice on nor an endorsement of any insurance company or products. Please consult a professional licensed insurance broker.
About the Author
Robert Leroux heads iSapience – a B2B & B2C Lead Generation, Customised Outsourcing & Managed Solutions and International Business Consulting Company. Since 2000, he has helped numerous Australian and international clients across many industries including: IT, Digital, Retail, FMCG, Advertising, Wholesale, Distribution and Logistics, Gaming, International Trade, Infrastructure and Governments.
Gareth Jones is the Director of Business 2 Business (B2B) Insurance and President of Avalon Palm Beach Business Chamber. B2B Insurance is an innovative broker specialising in providing tailored insurance and risk management solutions for its clients. They work with companies ranging from ASX200 to SME’s spanning a range of industries.