Terror charge on home insurance

HOMEOWNERS could face a flat additional premium to cover them for terrorist damage to their property under plans being discussed by the insurance industry and the Treasury.

The premium would be levied on insurance companies by Pool Re, the Government-backed terrorist reinsurer of last resort, if its scope was extended to cover home insurance.

Pool Re, set up in the early Nineties after IRA bombings in the City, only provides insurers with cover for damage to commercial property.

But insurers and reinsurers are worried about the extra threat of vast payouts in the event of a terrorist atrocity in residential areas. Perceived threats, industry trade publication Post Magazine reports , include a commercial jet being crashed into London or flood defences being attacked.

It says the fee could be a flat £1 per policy but the Association of British Insurers insisted no amount had been decided.

The possible extension of Pool Re's remit comes as part of a review by the industry and Government of insurance practice in the wake of the 11 September terrorist attacks on the US.

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