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Thursday, 12 December 2002
Page: 8179


Senator Mark Bishop asked the Minister representing the Minister for Veterans' Affairs, upon notice, on 15 November 2002:

(1) Can the Minister confirm that Defence Service Homes Insurance has informed policy holders that ex-service people's homes are no longer covered for terrorist attack; if so: (a) what prompted the advice of this new limitation; (b) from what source was advice received on the probability of such threats; (c) what has been the practice of other insurance companies in the market; and (d) what other events are nominated in policies for which claims will not be accepted.


Senator Hill (Minister for Defence) —The Minister for Veterans' Affairs has provided the following answer to the honourable senator's question:

(1) Yes. This was a restatement of a long standing policy exclusion.

(a) This is not a new limitation, as “terrorist activities” has always been excluded from the Defence Service Homes Insurance (DSHI) Building Statement of Conditions and, in general, is an uninsured peril in any domestic household policy.

In wake of the 11 September 2001 terrorist attacks in New York, regulators of the global Insurance Industry (in particular Reinsurers) directed that the word “terrorism” required specific definition. The clause is intended to be read in conjunction with Part 7 (General Exclusions) in the Statement of Conditions, Home Building Policy booklet, which states:

“We do not insure you for loss or damage or legal liability caused by any war, or war like or terrorist activities”.

(b) Information relevant to the probability of terrorist threats was not the catalyst for the endorsement, as damage caused by terrorist activities has always been an exclusion of the Defence Service Homes Insurance (DSHI) policy.

(c) The endorsement that Defence Service Homes Insurance (DSHI) has issued to all policyholders since May 2002, is consistent with the practices of both the national and international domestic insurance market. The intention of the endorsement is to give the policyholders a more definitive understanding of the exclusion relating to terrorism.

(d) Part 7 (General Exclusions) of the Defence Service Homes Insurance (DSHI) Statement of Conditions, cites the following:

“Defence Service Homes Insurance General Exclusions:

(DSHI) does not insure you for loss or damage that is not directly caused by an event that (DSHI) insure you for, unless (DSHI) say that (DSHI) do in this policy.

(DSHI) does not insure you for loss or damage or legal liability that is intentionally caused by you or your family or a person acting with the consent of you or your family.

(DSHI) does not insure you for loss or damage or legal liability caused by:

· failing to keep the home or site in good repair and condition;

· the home or site settling or shrinking or expanding;

· hydrostatic pressure, or the earth moving (other than from earthquake), erosion;

· roots of plants, trees or shrubs;

· defects in structure, design, work done, or materials used on the home or at the site;

· wear and tear;

· mechanical, electrical or electronic breakdown except fusion of electric motors as defined in Part 3 of this policy;

· rust, corrosion, rot, mildew, seepage, rising damp, any gradual deterioration or process;

· vermin, insects (including termites);

· atmospheric or climatic conditions (other than those we say we will insure in the events section), condensation, evaporation;

· any substance at the home or site that is dangerous to health or property (for example, explosives, or asbestos);

· any process that involves you or someone with your consent applying heat to any property insured by this policy;

· the use, existence, or escape of any nuclear fuel, nuclear material or nuclear waste;

· any war, or war like or terrorist activities;

· any person or organisation legally destroying, or taking away your ownership or control of, any property insured by this policy;

· Any consequential loss other than that specifically provided for in this policy.”