Bombs away: Insurance takes cover from war and biological attacks

By Insure.com

The news is troubling. According to a recent report by the Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, "The threat of a biological or nuclear attack is likely to occur somewhere around the globe by the end of 2013." The largest threat is the possibility of a biological attack, which the commission concluded is of greater concern than a nuclear attack.

If a terrorist group or an act of war destroyed your home or car, will your insurance come to your aid?

The Insurance Information Institute (III) states that the difference between "acts of war" and "terrorism" are clearly defined in most insurance policies.

"Standard homeowners insurance policies include coverage for damage to property and personal possessions resulting from acts of terrorism," says Bob Hartwig, president of III. "Acts of war" are clearly excluded in standard home insurance policies, but not acts of terrorism. He says that because home insurance policies cover damage from fire, smoke and explosions under almost any circumstances — including those that arise from a terrorist attack — you would be covered.

Hartwig adds, "After 9/11, the technical definition of ?war' or an ?act of terrorism' had some theoretical ambiguity. It was left to the federal government or the state insurance department to provide a clear definition for the industry." Hartwig notes that the Secretary of Treasury decides changes to insurance coverage for terrorist acts --including any ramifications for car and home insurance.

If a group such as Al-Qaeda bombs a residential neighborhood, your property is covered under your home and auto insurance policies. "After an incident, there will be a declaration by the Treasury Department on whether or not an act of terrorism occurred," he explains. "It has to be certified officially that it was an act of terrorism and not an act of war declared or undeclared. If a home is covered by a policy, a homeowner will be given the same coverage that they would normally get for any damage resulting from a terrorist attack."

A terrorist act, unlike an act of war, must be perpetrated by an entity that is not a sovereign state.

The Code of Federal Regulations (28 C.F.R. Section 0.85) defines terrorism as "the unlawful use of force and violence against persons or property to intimidate or coerce a government and the civilian populations in the furtherance of political or social objectives."

Fundamentally uninsurable

When it comes to acts of war, you're out of luck. Your home and auto policies do not cover acts associated with war. Nuclear, biological, chemical or radiological attacks qualify as acts of war. "There has never been an example where the U.S. declared an act of war on a group of people, even after 9/11," Hartwig says. "The nature of the [war] declaration by a high-ranking U.S. official, such as the President and Congress, would decide if it would be excluded in a standard insurance policy."

Biological attacks by terrorists also fall outside coverage by insurance. Jeff McCollum, a spokesperson for State Farm, says, "If a terrorist group is identified as the group responsible for burning down homes across the country, the damage would be covered," he says. "If they go around the country planting big bags of anthrax in homes, it would fall under most contamination exclusions." This type of exclusion is generally applied to mold, but it also extends to other forms of biological contamination such as anthrax.

"If someone has to wear a biohazard suit to clean up your car or home, it is probably excluded," explains McCollum.

Policies for condominiums and co-ops would cover personal possessions that are destroyed or lost due to an act of terrorism, like an explosion. Insurance payments for damage to common areas such as the roof, basement or other structures depend on whether the association or co-op board purchased terrorism insurance to cover those areas. Renters insurance policies are similar when it comes to coverage for personal property, but damage to the apartment complex itself would have to be covered by a terrorism policy taken out by the property owner.

Your car under attack

If your car is damaged or destroyed in a terrorist attack, car insurance policies will cover the damage if you have purchased comprehensive coverage. Most auto lenders require you to buy comprehensive coverage if you have a loan or a lease on your car. If you have only liability coverage, your car would not be covered for damage resulting from a terrorist attack.

However, if your car becomes contaminated with a biohazard, don't count on your auto insurance to cover the decontamination required to clean it. Many auto insurance policies also have a biological exclusion that falls under contamination or pollution, so it is best to re-read your insurance policy to learn the details.

Nuclear attacks: Cross them off the list

Under the Terrorism Risk Insurance Act (TRIA), owners of commercial properties, including apartment buildings, must be offered the opportunity to purchase terrorism coverage.

But when it comes to nuclear hazards, McCollum says, "Nuclear ?anything' is generally excluded. It doesn't matter whether it's a leak from a nuclear plant nearby or a bomb explosion. If nuclear energy is involved in some way, it's not covered," says McCollum.

Biological warfare: Not covered Anthrax: A noncontagious, potentially fatal disease caused by breathing, eating or absorbing the disease through cuts in the skin. The bacterium is known as Bacillus anthracis. There are two forms: pulmonary (more fatal) and coetaneous, larger spore-forming bacteria found in soil. If vaccinated before exposure and treated with antibiotics after, there is a good chance of survival. Causes death within 24 to 36 hours without vaccine and a heavy dose of antibiotics including penicillin and Cipro (Ciprofloxacin), but can be resistant to vaccines. Smallpox virus: A serious, contagious, highly infectious viral disease. There is no specific treatment for smallpox disease, and the only prevention is vaccination. The last case of smallpox was eradicated in 1977 after a massive worldwide vaccination campaign. Ricin: A fatal toxin derived from the castor bean. Fluid built in the lungs leads to respiratory distress and can kill in three days. There is no antitoxin or vaccination available. Botulism: A neurotoxin released from bacteria and associated with rotting food in infected cans. It has an untreated mortality rate of 100 percent. When treated, there is a 25 percent chance of survival but recovery takes months. An antitoxin is available. Pneumonic plague: The result of bubonic plague and caused from an infected fleabite. It is a virulent form of pneumonia. There is a 50 to 90 percent mortality rate if left untreated. There is a 15 percent chance of survival when diagnosed and treated for all other forms of plague. There is an antibiotic treatment. Tularemia or rabbit fever: A biological infection of wild animals in the northern hemisphere and in humans bitten by ticks in contact with infected animal tissue. Fatal in 5 percent of the cases and, without treatment, the risk of death increases to more than 30 percent, depending on which form of this disease you are infected with. Treated with antibiotics and there are no vaccines available. Source: CDC

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