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Life Insurance fears after London 7/7
**Please note these
articles are for informational purposes only and do not represent financial
advice either from the author or Purposeloans.co.uk
Following on from the tube train and bus bomb attacks in London there was a move
from several UK insurance companies to reassure victims that claims would be
processed “quickly and sympathetically”. This need for reassurance came in light
of concerns that many victims of the blasts would not be covered by their
existing health and life insurance cover. This would mean that families of the
bombing victims could not only lose a relative, but also suffer financial
hardship as life insurance companies refuse to pay out on policies.
Standard Life, Axa-PPP and Norwich Union all announced that policy holders would
be covered for events on the 7th July. Standard Life said that the company was
not looking to "cause more distress" to victims and their families.
Reuters have been told that other firms such as Churchill, Endsleigh and Direct
Line are likely to be sympathetic when dealing with people who have been injured
or whose holidays have been disrupted, however these insurers have fallen short
of announcing complete cover.
Churchill said that it would, "provide cancellation and personal accident cover
if customers are physically injured on the way to their holiday departure…in
addition, if any of our customers are away on holiday and hear of injury or
death to a close relative, we will facilitate their return home…missed
departures due to travel delay in central London will also be treated
sympathetically.” This is despite Churchill including ‘acts of terrorism’
exclusions into their policies. This means that policies will generally not
pay-out if losses are sustained due to any terrorist activities. This represents
one of several general exclusion clauses which are often regularly added to many
policies and which prevent payout for particular potentially costly situations
for the insurers.
The terrorism exclusion is still regularly included in policies despite the
introduction in 1993 of the Terrorism Insurance Program which provides
reinsurance cover to the majority of U.K. insurers, is expected to absorb a
large proportion of the insurance claims resulting from the 7th July attacks.
Under the program, the insurance industry as a whole is liable for 75 million
pounds per terrorist "event", with losses above that covered by a mutual
reinsurance pool. Should the costs rise above the funds available through the
pool, then the UK Treasury will step in to cover the remaining costs.
Another group recently highlighted who may fall foul of this exclusion is the
emergency services workers. Unison representatives have warned that this
exclusion clause could leave emergency workers and their families high and dry
if they are injured or killed. This would prove particularly disastrous for
families with personal insurance policies which cover accidents and that also
offer mortgage protection, as the potential loss of income due to injury
combined with the lack of mortgage cover resulting from the exclusion, could
mean those workers’ families affected may experience difficulties maintaining
their future mortgage payments.
Some fire crews in Somerset have already threatened to go on strike due to
claims that they may not be insured if they are injured whilst dealing with a
terrorist attack. This action has since been called off, but many emergency
workers are still justifiably worried, not only for their own safety, but also
their families should anything happen to them whilst responding to a terrible
emergency such as has already been seen in London.
Unison ( http://www.unison.org.uk/ ) pointed out that its own insurance policy
which is offered to members provided full cover and called for other insurers to
do the same.
Sam Oestreicher of Unison said, "We are asking all insurance companies to look
at their policies and if they have such exclusion clauses to drop them".
The Association of British Insurers has also tried to reassure emergency workers
and other customers saying, “most types of insurance are readily available
without terrorism exclusions… The major personal types of insurance, such as
life, household and comprehensive motor insurance provide cover for the effects
of a terrorist incident as a standard feature of the policy."
Today the plethora of online comparison sites such as Moneynet ( http://www.moneynet.co.uk
) or Moneyfacts can search all the insurance policies available and provide
guides to help consumers make decisions, however the need for people to check
with providers to ensure they are not left unprotected has never been more
evident.
The insurance industry itself has admitted that some policies do have exclusion
clauses and are also advising policyholders to study the small print or contact
their insurance company or broker to determine their cover levels.
About The Author
Richard Green lives in Edinburgh, occasionally writing for the personal finance
blog Cashzilla
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