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ACE warns on terrorist exclusion clauses

DESIGNERS OF buildings hit by terrorist attacks will no longer be protected by professional indemnity (PI) insurance when their policies come up for renewal, consultants warned this week.

The Association of Consulting Engineers is telling its members that new PI policies will specifically exclude terrorism claims arising from attacks on existing buildings.

The warning comes because insurers have begun to refuse professional indemnity insurance cover for buildings and infrastructure damaged by terrorists.

The ACE is advising its members to attempt to exclude liability for structural failures of buildings damaged in terrorist attacks when agreeing contracts with clients.

'At your next renewal an exclusion will be applied to your policy in respect of terrorism, ' says an ACE briefing note which will go to its members next week.

It also warns that consultants could be sued if terrorists damage or destroy buildings they have designed and which have been built.

'There are steps that you can take to protect your position into the future, by introducing an exclusion of liability into all agreements and warranties with clients which mirrors the eventual policy exclusion, ' says the briefing note.

The ACE document says that insurers are unable to price the risks of terrorist attacks because such events defy statistical predictions.

It points out that the estimated cost of the 2001 terrorist attacks on the World Trade Center in New York is $50bn (£31.25bn).

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