Salisbury Poisonings Highlight Increasing Need for SMEs to Ensure They Have Right Cover in Place
The unprecedented nerve agent attacks in Salisbury earlier this year left many chain and independent shops restricted from the public for months. The impact on the small businesses affected has been crippling, with the Government forced to spend almost £1.4m in order to prevent business closures and safeguard local jobs. Here, our Managing Director Bryan Banbury, discusses how too many city centre businesses are at risk of being left thousands of pounds out of pocket following a terrorist attack as a result of inadequate insurance provision.
When most businesses think about the type of insurance cover they need, protection against an act of terrorism isn’t high on the list. Many think it’s not something that will ever apply to them; after all, why would a terrorist attack a small coffee shop or independent gift store? Others wrongly assume that in the unlikely event of an attack any damage to their business would be covered on their standard policy. Both of which mean that their business is highly vulnerable should the worst happen.
In the last 10 years the nature of terrorist threats has changed greatly, with terrorism now causing more loss of life and economic impacts than traditional property damage. With the frequency and range of attacks increasing, businesses need to ensure that their cover is fit for purpose and offers the right level of protection to cover all eventualities.
In the past, terrorism insurance has covered business interruption caused by damage to premises – mostly geared towards the use of explosives in large scale attacks. However, businesses do not always have to be the direct target to be financially impacted by an event. With more events involving the use of handheld weapons and vehicles to cause human casualties; businesses must consider more than the direct effects of physical damage.
Personal injury, potential liability claims from staff or customers, and indirect effects on their business, such as temporary closures or a decline in visitors and customers – are also critical issues. Attacks such as those in Salisbury and last year in Westminster and Borough Market, often result in businesses being forced to close for long periods of time despite no actual physical damage, this is known as denial of access - where people are barred from entering an area or building - and is not covered by a number of standard insurance policies.
Retail, hospitality and entertainment businesses are particularly vulnerable to losing out in this way – with more and more terror events taking place in and around these types of venues, tourism is taking a huge hit in certain cities.
In fact, reports show that the five terror attacks that took place in the UK in 2017 –at Westminster, Manchester, London Bridge, Finsbury Park and Parsons Green – potentially led to a loss in economic output of €3.5bn. Trade in Salisbury is down 12 per cent, with local bed and breakfasts reporting a 40 per cent fall in visitors in the aftermath. While the city is getting back on its feet, it’s estimated it will take up to two years for the tourist destination to recover completely.
Whilst the evolving nature of terrorism incidents brings a whole new set of risks and exposures, the good news is that insurers are now beginning to address this, with policies providing a range of cover; including non-damage business interruption, denial of access, and loss of attraction – without related property damage.
Whilst the devastating effects of terrorism will still cause huge upset and trauma to victims, these changes will bring some much-needed protection for vulnerable business owners in the aftermath of an attack. What’s important, is that business owners are checking their policies carefully, to ensure that in today’s ever-changing world, they are suitably covered against all possible impacts on their business.
If you have any concerns or questions about your current cover or want to know more about options for terrorism insurance, contact us on 0115 947 0032.