How Does War Risk Insurance Work?
War Risk Insurance is a specialised form of coverage designed to protect businesses against losses resulting from war-related events during the transportation of goods.
While standard marine insurance generally excludes war-related perils, War Risk Insurance provides specialised coverage designed to protect international shipping and logistics businesses from the unique threats posed by conflict zones and geopolitical instability.
Key Components of War Risk Insurance
1. Coverage Scope
War Risk Insurance covers a range of perils, including:
- Hostile Acts: Acts of war, invasions, insurrections, riots, strikes, and coups.
- Terrorism: Damages resulting from terrorist activities targeting vessels or cargo.
- Sabotage and Piracy: Losses due to deliberate acts of damage or theft.
- Civil Unrest: Disruptions caused by political instability or civil disturbances.
2. Policy Structure
War Risk Insurance is typically offered as an add-on to standard marine cargo policies. It can be customised based on the specific needs of the business, considering factors such as:
- Route Risk Assessment: Evaluating the geopolitical stability of shipping routes.
- Cargo Type: Determining the nature of goods being transported.
Vessel Specifications: Assessing the value and type of the ship or aircraft.
3. Premium Calculation
Premiums for War Risk Insurance are influenced by various factors, including:
- Geopolitical Risk: Higher premiums are charged for routes passing through conflict-prone areas.
- Cargo Value: The higher the value of the goods, the greater the potential loss, influencing premium rates.
Duration of Coverage: Longer voyages or extended periods of coverage may result in increased premiums.
4. Claims Process
In the event of a loss, the claims process typically involves:
- Notification: Promptly informing the insurer about the incident.
- Documentation: Providing necessary documentation, such as bills of lading, cargo manifests, and incident reports.
- Assessment: The insurer assesses the claim to determine the extent of the loss and the applicable payout.
5. Exclusions
It is essential to be aware of common exclusions in War Risk Insurance policies, which may include:
- Nuclear Risks: Damages resulting from nuclear reactions or radiation.
- Strikes and Lockouts: Losses due to labour disputes.
Delay: Losses resulting from delays not caused by covered perils.
Your Insurance Expert
We deliver tailored advice to fit our clients’ requirements and ensure they understand the options available to them. Contact us for a free personalized assessment of your policy needs.
Recent Trends and Considerations
- Red Sea Route Risks
Despite ceasefire agreements, the Red Sea trade route remains risky due to ongoing threats of attacks by groups such as Yemen’s Houthis. These persistent threats have led to increased insurance premiums and rerouting of shipments around Africa to mitigate risks.
- Ukraine’s War Risk Insurance Expansion
Ukraine has expanded its marine war insurance program to include non-military cargo like iron ore and steel. This initiative aims to reduce the cost of claims for ship damages and crew injuries caused by the ongoing conflict, highlighting the importance of comprehensive coverage in conflict zones.
Why Choose Us?
We at Azure Risk combine deep industry expertise with a commitment to understanding your business. Partner with us to protect your operations and reputation with a policy that evolves alongside your company’s ambitions.
Get in touch today to learn how our Freight Forwarders Liability Insurance can safeguard your business, your cargo, and your peace of mind.
Why Choose Azure Risk for War Risk Insurance?
At Azure Risk, we specialize in providing tailored War Risk Insurance solutions to meet our clients’ unique needs. Our expertise ensures that your assets are protected against the unpredictable nature of global conflicts.
Our Services Include:
- Customized Insurance Packages: Tailored to your specific business operations and risk exposure.
- Expert Consultation: Guidance on navigating high-risk regions and understanding policy terms.
- Claims Assistance: Support throughout the claims process to ensure timely resolutions.
- Global Network: Access to a wide range of insurers and reinsurance partners.
Contact Azure Risk Today
Protect your operations against the unexpected. Contact Azure Risk today to explore tailored War Risk Insurance solutions that safeguard your business in volatile regions.
