War risk insurance provides compensation for economic losses caused by war, internal conflicts, terrorism, and weapons of mass destruction. It is commonly purchased by airlines and shipping companies for their vessels and aircraft, as well as for crews, passengers, and cargo. The cost varies based on the value of the property insured and the estimated risk, with hazardous or unstable area insurance being more expensive. Relief organizations may also purchase war risk insurance for employees working in lawless areas or combat.
War risk insurance is insurance that provides compensation for economic losses caused by war and other forms of large-scale or political violence. In addition to insurance against damages caused by acts of war, this type of insurance also includes internal conflicts, such as insurrections and civil wars, and acts of terrorism, such as bombings and hijackings. In some cases, it also covers damage caused by weapons of mass destruction. It is most commonly purchased for commercial vessels and aircraft, but can also be used to insure other property or personnel at risk from violent conflict.
War risk insurance exists as a separate category because most conventional insurance policies that provide coverage for damages caused by accidents, crimes, or natural disasters specifically exclude damages caused by wars, rebellions, and other internal conflicts or terrorist attacks. Normal insurance also does not provide compensation for government seizure; nationalization of assets; property damage; or injuries from weapons of mass destruction, such as nuclear bombs and radiological weapons.
The main customers for war risk insurance are airlines and shipping companies. Insurance for ships or aircraft themselves is called war risk hull insurance, while insurance for crews, passengers and cargo is called war risk liability insurance. Other companies may also purchase insurance to cover damage to property, such as buildings or equipment, in countries where there is an ongoing conflict, terrorist attacks are considered a greater risk, or where the risk of violence is high due to instability politics.
War risk insurance can also provide compensation for injuries, disabilities or deaths sustained by personnel, as well as risks such as kidnapping for ransom. In addition to for-profit corporations, relief organizations sometimes purchase war risk insurance for employees because the nature of such groups’ work may require personnel to be in lawless areas or combat. Aid workers are also sometimes at risk as they may be seen as valuable hostages or targeted for intimidation or politically motivated assassination.
Like other forms of insurance, such as health or automobile insurance, the cost of war risk insurance varies based on the value of the property insured and the estimated risk. Hazardous or unstable area insurance is more expensive, with insurance companies maintaining lists of countries considered high risk. Shipping rates also depend on the shipping route and are influenced by factors such as pirate activity.
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