Following a spate of terrorist attacks using vehicles, the International Underwriting Association developed a new model clause for clarifying motor terrorism coverage.

Concern over the potential scale of liabilities that could be incurred through the unlimited cover for bodily injury was a major concern for motor reinsurers and led to a review which culminated in the Motor Insurance Bureau agreeing to mutualise these risks and provide compensation for victims of vehicle-related terrorist events.

The new IUA clause (reference: IUA 02-025) clarifies the position by making available a model exclusion of losses from acts of terrorism for ordinary motor policies.

Chris Jones, director of Legal and Market Services at the IUA said: “A number of tragic attacks in the UK and elsewhere illustrated possible circumstances which could overwhelm the market and leave members of the public without adequate cover or compensation.

“IUA members liaised with the Motor Insurance Bureau as a solution to the problem was developed. Our new clause acknowledges the role that it will now play to help ensure innocent victims are able to receive the full compensation they deserve, in a way that is manageable for the reinsurance market.”

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