Recent events in Ukraine such as sudden annexation of the Crimea, military clashes in Donetsk and Lugansk regions, US dollar exchange rate instability brought about coming up of the natural question relevant to both ordinary citizens and businessmen – is it possible to be insured against damage caused by civil commotions, terrorism or military operations?
A year and a half ago, before events in Ukraine took dramatic turn, involving use of weapon and massive casualties, the question of the abovementioned risks to be covered by the insurance was raised very rarely.
It is worth mentioning that standard property insurance agreements, both named perils policies or all risks ones alike, stipulate that those risks be excluded from the coverage. However, during the current events in Ukraine there were cases when the shell hit somewhere in Donetsk region was classified by the competent authorities as arson with the confiscation of one’s property being looked upon as the simple robbery. Of course, such precedents served to the benefit of the insured. The insurance companies very soon learned their lesson, though. Many of them started to include the detailed description for definition of each and every risk as well as exceptions. They also stopped to dwell upon the competent authorities certificates for classification of the occurrences.
Below are the most common questions associated with this issue resulting from the current events in Ukraine.
Strikes, riots, civil commotions.
1. Is it possible to get strikes and riots insurance for events in Ukraine? The answer is yes. The coverage of standard property policy can be easily expanded for extra premium accounting for nearly 20 % of initial payment. However, one should keep in mind that such insurance does not cover strikes and riots of political nature. This means that if we are talking about Revolution of Dignity aimed at changing Ukraine’s political structure, the damages associated with it will not be indemnified by the insurance company. Such policy is intended to work for employees’ strikes, football fans’ disturbances or any other actions of aggressive group of people united by one idea.
2. How did ATO influence the possibility of getting terrorism insurance coverage? This risk is covered by another type of policy. It was present in the market long before Ukraine’s events escalated to the military conflict with subsequent launch of Anti-Terrorism Operation (ATO), but it was never popular among the companies buying insurance on their own accord. Policies for mortgage property were an exception, though, as many foreign banks and investment companies typically requested the terrorism insurance from their borrowers. This risk coverage is still available in the market. The price for it, however, increased significantly. For instance, in 2013 the terrorism coverage for UAH 300 mln worth of real estate was priced at UAH 100,000-150,000. Last year this number went up to as high as UAH 500,000.
The above mentioned risks are essential nowadays for every business. Unfortunately, high rates make it possible only for large enterprises to enjoy the benefits of such insurance coverage.