Terrorism & Insurance

The Terrorism Insurance Act 2003

What does the legislation do?
The Terrorism Insurance Act 2003 establishes a scheme for replacement terrorism insurance coverage for commercial property and business interruption.
The legislation overrides terrorism exclusion clauses in eligible insurance contracts. Eligible insurance contracts have a starting point definition of insurance for loss of or damage to eligible property located in Australia, and associated business interruption and public liability cover. Eligible property is defined as buildings or other structures or works on, in or under land, or tangible property that is located in or on that property. **Commercial, not residential**

When does the scheme commence?
The scheme will commence on 1 July 2003.
Why has it been introduced?
The scheme is in response to calls for government intervention in an area of clear market failure as cover for terrorism insurance was withdrawn progressively by insurance and reinsurance companies in the aftermath of the terrorist attacks in the United States on 11 September 2001. Where cover has still been made available since that time, premiums have been at levels that exceed perceived cost of risk with large excesses and low maximum coverage.
Lack of terrorism insurance creates uncertainty for commercial property investors, lessees and financiers alike.

Coverage
The scheme covers insurance for loss of or damage to commercial property that is owned by the insured, insurance for business interruption arising from loss of or damage to or inability to use eligible property, and insurance for liability of the insured arising from ownership or occupation of eligible property.

Private residential property is not included in the scheme.
Risk cover is for any declared terrorist incident, except events involving damage from nuclear causes . Coverage will be available for Commonwealth and State business enterprises as well as Commonwealth-owned airports leased commercially. Farms will benefit from cover for terrorism risk if they hold insurance against business interruption.
The Regulations also exclude certain other types of insurance coverage, including: marine insurance, aviation insurance, motor vehicle insurance, life insurance, health insurance, private mortgage insurance, medical indemnity insurance, and professional indemnity insurance.


(as taken from Australian Reinsurance Pool Commission.)
For complete information on terrorism and how it relates to Insurance, pls refer to full summary at http://www.arpc.treasury.gov.au/content/faqs.asp?NavID=5#q6