Terrorism Insurance and Pool Re
Written by Scott Jones, founder of CommercialPropertyKiln · Last updated
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Standard property insurance often excludes terrorism, so cover is arranged separately. In the UK, much of it is underpinned by a government-backed scheme called Pool Re.
Why separate cover
After large-scale terrorism losses, insurers withdrew from covering the risk, and the government-backed reinsurance scheme Pool Re was created so that terrorism cover remains available. Terrorism cover is usually bought as an add-on or a separate policy, and in some locations and property types it is important.
Do you need it
Whether to take terrorism cover depends on the property's location, profile and value, and on what the lease and any lender require. Some leases oblige the landlord to insure against terrorism where cover is available at reasonable cost, and lenders may insist on it. Higher-profile locations and larger assets are the usual candidates.
Fitting it into the lease
Where terrorism cover is taken, its cost is generally recovered like other insurance, as insurance rent, subject to the lease. Check whether the lease requires it and how the cost is dealt with.
Take advice
The need for terrorism cover, and its cost, vary widely. Discuss it with a broker who understands the scheme and your property, and check your lease and loan conditions.
Is terrorism cover included in commercial property insurance?
Often not. It is usually bought separately, underpinned by the government-backed Pool Re scheme.
Do I need terrorism cover?
It depends on location, profile and value, and on what the lease and any lender require.