Insurer refuses to cover al-Qa'ida attacks

The growing threat from terrorism has led Britain's biggest home insurer to specifically exclude cover for chemical, biological and "dirty" nuclear attacks.

In an unprecedented move, renewal documents sent to householders by Norwich Union since 1 January warned that their home and content policies would not entitle them to compensation for damage caused by such attacks.

But the company's domestic policy holders will be able to continue claiming for damage caused by a conventional bomb blast. And businesses will still be able to obtain cover for a chemical, biological or nuclear threat – but only if they are prepared to stump up additional premiums.

Other insurance companies are expected to follow suit, after repeated official warnings that Islamist terrorist groups are likely to attempt to use weapons of mass destruction in Britain. Acts of war are traditionally excluded from home insurance policies.

Norwich Union, which insures one in five of all homes in Britain, said the detailed specification of terrorist acts had become necessary because of the increasing uncertainties of the post-September 11 world. Customers also raised concerns, David Ross, a company spokesman, added.

Policy writers are said to have spent most of last year working out the wording to the new chemical, biological and nuclear exclusions.

New policies, and those being renewed, will contain a note stating there is no cover for "any act or acts including but not limited to: the use or threat of force and/or violence and/or harm or damage to life or property (or the threat of such harm or damage including, but not limited to, harm or damage by nuclear and/or chemical and/or biological and /or radiological means caused or occasioned by any person(s) or group(s) of persons, or so claimed, in whole or in part, political, religious, ideological or similar purposes."

Mr Ross said last night: "After 11 September we felt it was necessary for our customers to understand what they are covered for. People are worried about the chemical, biological and nuclear threats and wanted to know where they stood with our policies.

"It is a matter of cause and effect. Excluding war, until now we were looking at things like an accident at a nuclear power station, or Porton Down [military research centre], for these kinds of disasters. It is our view that our home and contents policies would not have provided covers for these, and we are telling customers that this applies to terrorist action as well.

"I am surprised more people [insurance companies] have not done this, but I think they will. Our concern is customers might think they can get the help elsewhere – the answer is, they won't."

A spokeswoman for the Association of British Insurers said: "Norwich Union are the first insurers to take such a measure regarding terrorism. We do not know if and when other companies may do the same." On average, insurance premiums for public buildings have doubled in Britain since the 11 September attacks.

Venues such as Bluewater Shopping Centre in Kent now pay up to £500,000 more than last year.

In the United States, President George Bush signed the Terrorism Risk Insurance Act to ensure insurers provide cover for acts of terrorism. But this does not cover chemical, biological or nuclear attacks.