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War Risk Insurance

Definition

War risk insurance is a type of insurance which covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction. It is most commonly used in the shipping and aviation industries. War risk insurance generally has two components: War Risk Liability, which covers people and items inside the craft and is calculated based on the indemnity amount; and War Risk Hull, which covers the craft itself and is calculated based on the value of the craft. The premium varies based on the expected stability of the countries to which the vessel will travel.

What is 'War Risk Insurance'

A policy that provides financial protection against losses sustained from occurrences such as invasion, insurrection, revolution, military coup and terrorism. Auto, homeowners, renters, commercial property and life insurance policies often have act-of-war exclusions, meaning that they will not pay for losses caused by war-related events. Because war risk may be specifically excluded from a basic insurance policy, it is sometimes possible to purchase a separate war risk insurance policy.

Explaining 'War Risk Insurance'

War risk insurance makes the most sense for entities that are particularly exposed to the possibility of sudden and violent political upheavals. For example, companies operating in politically unstable parts of the world are exposed to an elevated risk of loss from acts of war. War risk insurance can cover perils such as kidnapping and ransom, emergency evacuation, worker injury, long-term disability and loss or damage of property and cargo. Some war insurance policies also cover acts of terrorism, but others consider terrorism and war to be two separate categories of peril.


Further Reading


Trends in transnational terrorism and implications for US National security and US Terrorism risk insurance act
www.tandfonline.com [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …

Policy watch: challenges for terrorism risk insurance in the United StatesPolicy watch: challenges for terrorism risk insurance in the United States
www.aeaweb.org [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …

Emergent trends in aviation war risk insuranceEmergent trends in aviation war risk insurance
heinonline.org [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …

What do we know about cyber risk and cyber risk insurance?What do we know about cyber risk and cyber risk insurance?
www.emerald.com [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …

Political risk investment insurance: a renaissancePolitical risk investment insurance: a renaissance
jsf.pm-research.com [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …

Earthquake risk insuranceEarthquake risk insurance
agris.fao.org [PDF]
… an initial sum that is used to purchase reinsurance to cover their mutual liability risks … 22 The White House, “Presidential Memo on Marine War Risk Insurance Coverage,” December 12, 2001 … that Congress does not need to amend the existing federal insurance statutory construct …



Q&A About War Risk Insurance


Why might you need war risk insurance?

Because there are exclusions in basic policies for acts of war.

Who would benefit most from having war risk insurance?

Companies operating in politically unstable parts of the world are exposed to an elevated risk of loss from acts of war.

What is war risk insurance?

War risk insurance is a policy that provides financial protection against losses sustained from occurrences such as invasion, insurrection, revolution, military coup and terrorism.

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