Terrorism: is your block policy right for you?
Don't get caught out without the right insurance
With vigils held earlier today for the people killed and injured in Friday?s horrific terror attack at London Bridge, our thoughts are with the friends and families of the victims. And as leasehold specialists, the team here at Ringley is also well aware of the implications of the threat of terrorism for property managers, their clients, and residents.
Terrorism cover used to be included in block buildings insurance policies up to a certain limit. In 2003, this was replaced by full all-risks terrorism insurance from the government-backed Pool Re scheme. Other less comprehensive (and cheaper) policies are also available in the London Lloyd?s market.
It is likely to be a condition of the lease that blocks are covered and the RICS Service Charge Residential Code recommends giving terrorism insurance ?serious consideration?. Anyone who arranges buildings insurance must ensure they comply with the terms of the lease and the Mortgage Lenders Handbook. If either of these states that ?all risks? or ?explosion? need to be covered, your block must have terrorism insurance. If the worst were to happen, non-compliance would mean the building owner or, in self-managing blocks the RMC directors, being held responsible. This could put personal assets at risk. For leaseholders, if an act of terrorism damages your block, you will still have to pay your mortgage and find the money for alternative accommodation while repairs or rebuilding takes place. So the right cover is vital.
The other aspect to take into account is the impact on residents, not necessarily of a direct attack on their home but of any incident close by. On Friday, immediately following the events at London Bridge, the police put the whole area into lockdown. As with the 2017 attacks at nearby Borough Market, local residents were told they couldn?t go home and must find somewhere else to stay.
As soon as any claim is made, blocks covered by the Pool Re policy will be paid out by their insurer who will then recover the costs. This means, if needed, temporary accommodation will be paid for. Other schemes may not pay out until the incident has been certified by the government as terrorism ? which may take a day or two - and residents may be left out of pocket. So before taking out a policy that looks like good value, read the small print carefully.
Statistically, the chances of a residential block being targeted by terrorists are low ? in fact, they are literally one in a million according to disaster experts. But with apartment blocks springing up all over our towns and cities, it is still possible that your building may be affected. So check your lease ? and your insurance policy - to make sure you don?t fall foul of the law or leave residents unprotected.
Author : Mary-Anne Bowring
Keep up to date
(Weekly, fortnightly or monthly)