Does your insurance policy cover terrorist attacks? Or do you need a separate add-on? Understand the full concept..
The blast near the Red Fort in the nation's capital has raised numerous doubts and questions about the safety of the common man, as well as about insurance. Do life insurance policies, which claim to protect you and your family, both during life and beyond, also cover terrorist attacks? Can your standard life insurance policy cover losses caused by terrorist incidents, or do you need to purchase special insurance or add-ons? Let's try to answer these questions based on facts and regulations.
Although terrorist incidents occur occasionally, the damage they cause is significant. They can pose a significant threat not only to property but also to human life. While insurance for cars and other vehicles covers disasters, and damage caused by terrorist incidents is easily compensated, the real issue is human life. Therefore, it's important to understand how life insurance policies sold in India cover terrorist incidents.
What to Check in the Policy Document
First, you need to know that not all insurance policies automatically include terrorist activities. Many policies require a separate option to cover terrorist activities, or separate terrorist policies must be purchased. This means that your life insurance policy currently excludes terrorist incidents. Most policies allow you to opt out, but many require you to purchase a separate add-on or no policy at all.
Changes in 2002
After the September 11th terrorist attacks in the United States in 2001, insurance companies worldwide withdrew from the policy. Subsequently, in April 2002, India established the Indian Market Terrorism Risk Insurance Pool (IMTRIP), managed by GIC Re. This pool protects against terrorist risks to property insurance policies. Under this pool, all insurance companies in the country collaborate to provide coverage against terrorist incidents and risks.
Premium Deposits in the Pool
Crores of rupees in premiums are deposited into this pool every year. In the financial year 2023-24, this pool received a premium of ₹1,654.63 crore, compared to ₹1,809 crore in the previous year. However, only ₹3.12 crore in claims for losses caused by terrorist incidents were settled, as there were no major losses in the country at that time. According to the IRDA report, this pool received a high premium, while claims related to terrorist incidents were minimal.
Maximum Coverage
Under this pool, insurance companies can provide a maximum coverage of ₹2,000 crore. This coverage is provided for losses incurred at a single location due to a terrorist incident. However, if someone requires insurance claims or coverage exceeding ₹2,000 crore, they will have to purchase a standalone insurance policy. Under this add-on, losses caused by terrorist incidents can be directly compensated. This includes coverage for explosions, fires, or damage to buildings.
What are the rules for insurance policies?
Most life insurance policies cover terrorist incidents, unless it is excluded under any rules in your document. This means that if someone dies in a terrorist incident, the insurance proceeds will be paid to their nominee. However, life insurance policies sometimes exclude coverage for war-like situations. Furthermore, coverage is also not provided if the policyholder is involved in a riot or attack.
Disclaimer: This content has been sourced and edited from News 18 hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
