Terrorism insurance

The need for terrorism insurance didn't come to light till 1930's. Later, due to growing wars between countries and within the borders of the country, there was a call for action on safeguarding the personal assets, which led to the concept of terrorism insurance.

Terrorism insurance is a special type of insurance purchased by property owners to cover potential losses and liabilities that might occur due to terrorist activities. Insurance companies usually collect a special premium called terrorism premium, in addition to the general premium.

What people generally think is terrorism insurance covers only insurance from "terrorists", however there's a broder definition for this term in the drafts, which includes not only terrorists but also any individual or a group casting violence.

One should know that insurance companies use some advanced strategies like "selected area targeting" to sell their insurance schemes. Small Insurance companies usually find profitability by collecting terrorism premiums from the residents of particular area where there is low/no chance of terrorism.

In this way they get a big fish in a small pond! This premium amount, which may look insignificant for a property holder, makes a huge difference to the insurance companies.