Brokers slam inconsistent approach to motor claims where terrorism is involved

Insurers have been criticised for failing to take a "uniform and consistent" approach to whether private motor policies will pay out in the event of a terrorist attack.

Concerns have also been raised over insurers' lack of clarity when it comes to outlining the nature of terrorism cover offered on their motor policies.

Insurance Times was contacted by Marrs Insurance Brokers after it attempted to gain clarification on these issues from a number of motor insurers.

Marrs began contacting insurers in August to query terrorism terms on motor policies.

Managing director Mark Coffer said he asked insurers whether they would pay out if the car was damaged by a terrorist bomb blast. He also asked whether they would pay out if it had been stolen to perform a terrorist act.

The results revealed a lack of uniformity between the UK's leading insurers (see box).

Norwich Union, for instance, said it would pay out on terrorism cover, AXA refused any pay-outs apart from those it was obliged to make under the Road Traffic Act.

Allianz Cornhill said it would not pay out on a third party claim but would cover the car if damaged in a terrorism act.

Coffer criticised insurers for not being sufficiently aware of the issue.

He said of the 17 motor insurers contacted only five were able to answer the query within a month. Zurich has still not been able to supply an answer.

"These are companies which make strident claims about broker support," Coffer said. "It is appalling."

The IIB said it would advise brokers to investigate what insurers will cover in the event of a terrorism act.

"We are alerting brokers to the differences in policies," Andrew Paddick, IIB director general said.

"There is an issue about clarity and disclosure to the policyholder."