What is a terrorism exclusion?

A terrorism exclusion is an endorsement to a home or a commercial property policy. It changes what is usual for you to claim after a loss.

A typical wording of a terrorism exclusion goes like this:

This form does not insure loss or damage caused directly or indirectly, in whole or in part, by "terrorism" or by any activity or decision of a government agency or other entity to prevent, respond to or terminate "terrorism". This exclusion applies whether or not there are one or more other events or causes (whether covered or not) that contribute concurrently or in any sequence to the occasioning of the loss or damage. If any portion of this exclusion is found to be invalid, unenforcable or contrary to statute, the remained shall remain in full force and effect.

What is terrorism? A typical definition is:

Terrorism means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf any any organization(s), groups(s) or government(s) for the purpose of influencing any government and/or instilling fear in the public or a section of the public.

If your business is real estate and you have large holdings then it would be important to you that you did not have a terrorism exclusion. If there was a terrorist attack and your buildings suffered destruction by the resulting fire then you would not have a valid claim if you have a terrorism exclusion.

Terrorism is a risk that has a low frequency but a very high severity. You need to consider the likelihood of a claim upon your business. If your business is in the downtown core of a major city then you would have a higher chance of suffering from a terrorism loss. After 911 the insurance companies rewrote policy wordings. Do understand what you have on your policy. Take control of your insurance.