Insurance in a Time of Conflict: The Truth About War Risk Coverage

 

In the wake of the recent confrontation between India and Pakistan through Operation Sindoor, a question in the minds of those with an insurance policy was if their policy will cover war-related damages. Our clients were no exception; we got queries on insurance coverage for wars during this period. War seemed a remote possibility until Operation Sindoor, but this operation made everyone believe that war was a reality and prompted the exploration of insurance coverage for such an incident. 

In this blog, we will explore the coverage for war in insurance policies.

War Coverage in Insurance Policies

Most insurance policies—whether for property, auto, life, health, or travel—include a war exclusion clause. This clause denies coverage for losses or damages resulting directly or indirectly from war, invasion, civil unrest, rebellion, insurrection, or military action. Importantly, this exclusion generally applies even if war is not officially declared.

Declared Wars: When a war is officially declared, insurers typically reject any related claims under the war exclusion clause.

Undeclared Wars: Even in the absence of a formal declaration, insurers may still deny claims if the event involves hostilities or actions of a military nature. Courts often base their decisions on the nature and context of the conflict rather than its legal classification.

Common Applications by Policy Type

·       Property and Casualty Insurance: Losses from war or similar hostilities are consistently excluded.

·       Life and Health Insurance: Many plans exclude claims linked to war or military service during wartime.

·       Travel Insurance: Typically, does not cover trip cancellations or injuries caused by war or political instability.
Marine Insurance: Standard coverage excludes war risks, but supplemental war risk insurance is available.

·       Terrorism Coverage: Treated separately from war; coverage depends on specific policy terms and jurisdiction. Most policies offer Terrorism as an add-on cover . The risk is covered by the Terrorism Pool.

Key Points to Keep in Mind

·        The exact language in your policy defines the extent of the exclusion.

·        It is the insurer’s responsibility to prove that a loss was due to a war-related event.

·        For individuals or businesses operating in high-risk zones, purchasing separate war risk insurance is often recommended.

Standard insurance policies are not structured to cover large-scale, unpredictable losses resulting from war. To effectively manage risk, it’s essential to understand what your policy does and does not cover.

 

Insurance Policies that include War Risks

Contrary to common belief, marine insurance policies do not automatically cover war risks at all times. While war risks can be included through specific clauses or policy extensions, coverage depends on the type of transit and the stage of the journey.

Let’s take a closer look at how war risk coverage works under different insurance scenarios.

Marine Insurance

War risks can be added as a separate clause under the institute war clauses, applicable to both cargo and hull insurance. This coverage typically includes:

·        War and civil war

·        Revolution and rebellion

·        Capture and seizure

·        Damage from mines or torpedoes

Aviation Insurance

War-related perils can be covered under Aviation War Risk Insurance, which is often provided through special risk pools or government-backed programs.

Common Misconceptions

Many assume that marine insurance automatically covers war risks once war clauses are attached. However, coverage depends on the specific nature of the transit—inland, export, or import—and the exact terms of the policy.

When War Risk Coverage Applies

1. Inland Transits

•  War risks are NOT covered under standard inland marine transit policies.
•  These are explicitly excluded in the policy wording.
• There is no provision to buy a war risk extension for inland-only transit.
  
  

2. Exports (From India)

•  War risks are excluded under standard marine cargo policies.
• However, they can be covered by attaching Institute War Clauses or through a separate War & Strikes Risk policy.
• Coverage begins once the cargo is loaded onto the overseas vessel or aircraft at the port or airport of export and continues until discharge at the destination port or airport.

Important: War on land is not covered—this applies only to sea or air transit.

 

3. Imports (To India)

• Like exports, standard cargo insurance does not include war risks.
•  Separate coverage must be obtained via the Institute War Clauses.
• Coverage starts when cargo is loaded onto the overseas vessel/aircraft and continues until discharge at the Indian port or airport.
• Once cargo is discharged at the Indian port, the inland leg of the journey is again excluded from war coverage.

War Risk Coverage in Indian Waters

Even when the ship enters Indian territorial waters (within 12 nautical miles from the coastline), war risk coverage still applies as long as the goods are onboard the overseas vessel and not yet discharged.

Acts of terrorism as acts of war

The Indian government’s approach of treating acts of terrorism as acts of war carries serious implications for insurance coverage—especially when it comes to the need for war risk insurance.

Impact on Insurance Coverage

1. Standard Insurance Exclusions

Most insurance policies—across life, health, property, and travel—exclude coverage for war and warlike operations. While some may include limited protection against terrorism, that coverage often doesn’t extend to events classified as acts of war.

2. Why War Risk Insurance Is Crucial

With terrorism now being treated on par with warfare, standard policies may no longer be sufficient. This is where war risk insurance comes in—it protects against losses arising from:

• War and civil war
• Invasion or insurrection
• Rebellion or hijacking
• Other hostile, warlike operations
  
  

3. Role of Terrorism Insurance Pools

India has a Terrorism Insurance Pool—a collective effort by insurers to offer uniform coverage for terrorism-related losses. However, this does not apply if the event is categorized as a war or warlike act, reinforcing the importance of securing separate war risk coverage.

 

Recommendations for Policyholders

Review Your Existing Policies: Carefully read the exclusion section of your policy. Watch for terms like war, warlike operations, or civil unrest—and check if terrorism is defined separately.

Talk to Your Insurance Provider: If you live, work, or operate in high-risk areas, it’s wise to consult your insurer about adding war risk coverage. Sectors such as oil & gas, media, international travel, or diplomacy are particularly vulnerable.

Stay Updated on Government Classifications: Government declarations can change the classification of events, which directly impacts what your policy covers. Staying informed helps you anticipate potential claim issues.

Who needs war coverage?

Coverage for war through insurance is required for those who are:

• Living or working in high-conflict zones
• Traveling to politically unstable countries
• Employed in sensitive sectors like defense, journalism, or energy
  
  

Individuals in these risk groups must:

• Review their policy for exclusions and limitations
• Check for optional terrorism or accidental death coverage
•  Understand geographic restrictions
• Consider custom group or global policies for added protection
  
  

Those in such occupations must disclose their profession, travel plans, and location accurately when buying a policy. Even if the cause of death or loss isn't directly related to war, non-disclosure can lead to claim rejection.

War risk coverage is not automatic and is limited in scope, depending on the type of policy and policy terms. Proper awareness ensures adequate protection and avoids unexpected claim denials. An insurance broker can be your best guide.

Contact Zen Insurance Brokers for further details.

 

Disclaimer:

Zen Insurance Brokers is an IRDA registered broker that facilitates quick and adequate insurance broking services. We deal with only regulator-approved products of insurers. We do not underwrite the products.