Standard buildings insurance excludes terrorism. Pool Re and commercial alternatives add it back. Check your schedule. Check your lenders' criteria. Decide before renewal.
This practice dates from the 1993 IRA Bishopsgate bombing, when reinsurers withdrew terrorism cover and the government created Pool Re as a backstop.
Most residential block policies list terrorism as an exclusion. Directors and managing agents often don't realise this until they read the schedule. But if your lenders require it, or your lease says insure for all usual perils, absence is a problem.
Two things have changed. First, post-Grenfell and post-Manchester Arena, terrorism cover is now considered standard for blocks over 18 metres and for blocks in central London. Second, many mortgage lenders (Nationwide, Santander, Lloyds, NatWest, Halifax) now require it as a condition of the mortgage, especially for blocks over £10m sum insured or near landmarks.
This page explains the three common positions, a simple calculator to decide whether you should have it, how to add it, and the cost.
LEASE-iQ flags lender requirements from mortgage deeds.
If your block has mixed tenure and multiple lenders, LEASE-iQ reads each mortgagee's requirements and flags if any require buildings insurance with terrorism cover. Use this to brief your broker and check your cover.
Most blocks fall into one of three states. Understanding yours is the first step.
Your policy schedule lists Terrorism as an exclusion or omits it from named perils.
Your policy schedule lists Terrorism as a named peril and references Pool Re.
Your policy includes terrorism cover from a commercial reinsurer (Hiscox, AIG, Lloyd's syndicates) or a standalone policy.
Use this tool to assess the strength of the case for adding terrorism cover to your block.
Most mainstream insurance brokers can arrange terrorism cover. Pool Re is the standard option.
Use this template to ask about your current position and the cost to add terrorism cover.
Terrorism cover is a standard insurance add-on, funded like the rest of buildings insurance.
The cost of terrorism cover (typically £50 to £300 per year for a block) is a buildings insurance cost and is recovered through the service charge in the normal way. No special recovery mechanism is needed.
Important: Buildings insurance is explicitly excluded from Section 20 requirements. Even though terrorism cover is an addition to the insurance premium, it is still insurance and does not trigger Section 20 consultation.
You do not need to consult leaseholders or seek their vote to add terrorism cover. This is a director decision on the same footing as renewing buildings insurance itself.
Terrorism cover is part of your annual buildings insurance contract. It does not create a new contract lasting more than 12 months and does not trigger Qualified Long Term Agreement (QLTA) rules.
A managing agent discovers that several leaseholders' mortgages require terrorism cover. The agent checks the current policy, finds it excluded, and adds Pool Re cover at renewal.
Situation: A 12-flat block in a suburb of Manchester, sum insured £800,000, built in 1987. The managing agent is approached by two leaseholders asking whether their mortgages (Nationwide and Santander) might require terrorism cover. One leaseholder is attempting to remortgage and the lender has asked about it.
Action: The agent asks the current broker whether terrorism cover is included. The broker reviews the schedule and confirms it is excluded. The agent requests a Pool Re quote for the next renewal. The quote comes back at £120 per year (about 10% of the total buildings insurance premium). The agent confirms this is acceptable and directs the broker to add it at renewal.
Outcome: At renewal, terrorism cover is added via Pool Re. The agent notifies leaseholders via the annual service charge budget that terrorism cover has been added at £120 per year and explains why (lender requirements, protection for high-value blocks). No Section 20 consultation was necessary. The cost is recovered through the service charge in the normal way.
Follow these steps to get it done.