Now, buy a terror cover mid-year

The need for terror insurance following the Mumbai attacks has prompted general insurance companies to introduce mid-term terror cover.

So far, individuals and companies could only opt for terror risk insurance when they purchased their policies annually. Terrorism risk insurance comes as an add-on product with property and life insurance policies and is not a standard policy.

Now, the mid-term policy will add terrorism cover to property, fire and engineering, projects, contractors’ all risk (CAR) that deals with civil work and storage-cum-erection meant to cover plants and machinery in the middle of the year.

Following the attacks in Mumbai in November, the demand for terrorism cover has gone up, though companies said that the enquiries are fewer now. Insurance companies said that the number of companies opting for terror cover is on the rise. Unlike earlier, when small hotels or even three-star hotels did not opt for the optional insurance, more players are showing an intent to purchase the terror cover now.

But those opting for a terror cover mid-way through the term of the policy will have to pay a higher premium, said a member of the General Insurance Council.

For instance, a policyholder who purchases a fire insurance policy in April and opts for a terror cover in October will have to shell out premium from April or before to get the terrorism cover. “The additional premium can be for six to nine months,” an insurance company executive said.

“After the terrorist attack in Mumbai, people have become more conscious of the fact whether their policy covers terror. With the demands for the product going up we have decided to bring a mid-term policy,” said United India Insurance Chairman and Managing Director G Srinivasan.

Insurance companies will shortly approach Insurance Regulatory and Development Authority to get the proposal approved.

But the higher demand is expected to raise the premium rates on these products as reinsurance rates have hardened.

In India, General Insurance Corporation manages the terror pool with contribution from all insurers who sell the insurance policy. The corpus of the Rs 1,300 crore pool is expected to be dented by around Rs 500 crore, resulting in an increase in premium rates.