Which peril is typically excluded under a block of flats policy but can be added as an optional extra?

A block of flats policy primarily covers communal areas such as hallways, roofs, and gardens, along with the owners' individual units. However, certain risks, particularly those deemed high in potential loss, are often excluded from the standard coverage to manage the insurer's risk profile.

Terrorism is a peril that is typically excluded because it represents a significant financial risk that can lead to substantial losses. Unlike more common risks like storm or explosion, which can be statistically predicted and estimated in terms of potential payouts, the nature and impact of terrorism can vary widely, making it challenging for insurers to protect against without incurring substantial financial liability.

To address potential customer demand for coverage against such high-impact events, many insurers provide terrorism coverage as an optional extra. This allows policyholders to choose whether to include this significant peril in their insurance policy, depending on their individual risk appetite and the level ofsecurity they desire for their property investment. Therefore, the correct answer aligns with common practices in the insurance industry regarding block of flats policies and optional coverages.