FAQ: What type of terrorism insurance cover is right for your real estate business?

What is terrorism insurance and why is it important to your real estate business?

Terrorism insurance provides coverage for damages or losses resulting from terrorist acts. As a residential real estate business owner, having the right terrorism insurance cover is crucial to protecting your residents, properties and financial resilience.

What types of terrorism insurance are available to you in the UK?

You have two primary insurance models to consider in the UK: the government-backed Pool Reinsurance Terrorism Insurance (Pool Re) and standalone terrorism insurance.

Pool Re coverage has the following features:

• Standardised definition, relying on the UK government’s certification of an “Act of Terrorism” under the Reinsurance (Acts of Terrorism) Act 1993
• Covers nuclear, chemical, biological and radioactive (NCBR) risks
• Limited scope, covering physical damage and business interruption from terrorism acts in Great Britain only, so excluding Northern Ireland and overseas assets
• Unlimited government financial backing from HM Treasury, providing strong security for catastrophic events
• Mandatory cession, with participating insurers being obliged to cede all eligible risks and not cherry-pick, known as ‘the selection rule.’

Standalone terrorism insurance are independent policies offering flexibility in coverage but often exclude NCBR risks unless you add them at additional cost. Key features of standalone terrorism insurance can include:

• Broader definitions, typically including a wider scope of perils, such as sabotage, riots, civil commotion, malicious damage, extending to cyberterrorism, depending on the provider
• Customisable terms you can tailor to your specific needs, including limits, deductibles and geographic scope
• Global coverage for assets outside the UK, depending on the provider
• Claims triggers with broader definitions of terrorism, typically based on the insurer’s own definition of terrorism and not reliant on government certification.

What evolving terrorism risks do you need to consider when deciding on terrorism insurance?

The UK’s current terrorism threats include targeted digital attacks on financial institutions, smart infrastructure and government databases; coordinated efforts to weaken national economies by sabotaging key trade routes or energy supplies; and AI-generated disinformation campaigns designed to destabilise markets or incite mass panic.

You may want to consider any and all these risk drivers when evaluating your terrorism coverage options.

What factors should shape your terrorism insurance decisions?

Your lease agreements play a significant role in shaping your terrorism insurance decisions. Many leases mandate coverage, while others leave it discretionary, creating inconsistencies in risk protection across your commercial and residential holdings. Another key consideration is whether your lender requires your residential property organisation to hold comprehensive NCBR terrorism cover.

What questions can help you decide on the right kind of terrorism cover?

• What are the specific terrorism risks associated with your properties and locations?
• Are there any lease or lending agreements that mandate or recommend terrorism insurance coverage for you?
• What type of coverage is available and is it suitable for your business needs?
• What’s the potential impact of emerging terrorism risks, such as cyberterrorism or supply chain disruptions, on your business?
• Are there any implications for your current or future terrorism insurance requirements following changes earlier this year to the Pool Re scheme?

Need expert support to decide between Pool Re and standalone terrorism cover? Our specialists can help you evaluate coverage, pricing implications and the most appropriate fit for your needs. Get in touch.

Contact

---

Fergus Critchley

Global Head of Terrorism & Political Violence

email Email phone +44 7825 790 897

---