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Terror insurance: Are you covered?

By Sheetal Jhaveri
December 29, 2008 17:13 IST
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The best insurance against terror is love. True but not very practical, is it?

And the recent Mumbai terror attacks proved it even as they left everyone in the country in a state of extreme shock. What has become very apparent, though, after these attacks was the fact that disasters can strike anybody, anywhere and in any form. And we have to be prepared to face such eventualities mentally, physically and even financially.

While life and death can be best left to the mercies of fate it is nevertheless wise to secure your dependants' future for such eventualities. And the main purpose of this feature is to focus on the financial aspect of terror-related deaths. How can you secure your family's financial future in the face of such unforeseen, unnatural calamities? There is only one simple answer: insurance.

I vividly remember those times in the early 1990s when people used to check whether life insurance would cover death by natural causes or illnesses? Today insurance takers are checking frantically whether death resulting out of a terror attack like the one witnessed in Mumbai is covered or not.

For such people there is hope. Death due to terror attacks is covered both under life insurance and general insurance.

Life insurance

This forms the most important part of risk management. It is prudent to make sure that death by terror is covered in the insurance plan you choose. In India most insurance companies cover death by terror barring a few private companies. The standard phrase that has always been emphasised is this: Please read the offer document carefully before selecting any kind of financial product. And it holds true in terror-related insurance cover cases more than ever before.

If you have selected a personal accidental rider (which covers bodily injuries, death and disability) along with your insurance cover then you can claim the insurance amount as assured under this rider as well.

Illustration: Suppose you have a term policy of Rs 25 lakh along with which you have added a personal accident rider of Rs 5 lakh. God forbid if you were to die due to terror acts then your family stands to receive a total of Rs 30 lakh as insurance amount: Rs 25 lakh as life insurance plus Rs 5 lakh of personal accident rider.

However, in case the insured person is just disabled or injured then s/he will get only Rs 5 lakh as part of her/his personal accident rider agreement.

Personal accident insurance

This is completely different from personal accident rider and should not be confused with the personal accident insurance which is a standalone policy.

Personal accident insurance covers any kind of damage inflicted like bodily injuries, death, temporary disability and permanent disability due to accident (which also includes terror acts). All of the above-mentioned damages are covered in this policy offered by general insurance companies.

To be on a safer side it is advisable to have a standalone personal accident cover rather than taking a rider along with your life insurance cover as the premium turns out to be cheaper. Also, the standalone cover does not end with life insurance claim unlike the personal accident rider claim.

Moreover standalone personal accident insurance policies allow coverage for older people which is not the case with personal accident riders.

Property insurance

This is a very important part of risk management. Check whether your property or home insurance covers damage to property caused by terrorism acts. If not, ask for a terror cover. Generally, you can get a cover for damage to property due to terrorist act after paying an extra premium amount.

The sudden importance of insurance for terror has had many investors scrambling to get terror insurance cover. Terror cover is the most unwelcome insurance one can have but in recent times it has become the most unavoidable one. Let's just pray for the day when there will be no need for a terror cover in our society. Amen!

Sheetal Jhaveri is a financial consultant and can be reached at

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Sheetal Jhaveri