War risk insurance
Encyclopedia
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.
Private war risk insurance policies for aircraft were temporarily cancelled following the September 11, 2001 attacks
and later reinstated with substantially lower indemnities. In the wake of this cancellation, the US federal government set up a terror insurance program to cover commercial airlines. The International Air Transport Association
has argued that airlines operating in states which do not provide war risk insurance are at a competitive disadvantage in this area.
A detailed study of the Insurance of War Risks and Terrorism, including related perils such as Strikes, Riots, Civil Commotion, and Military or Usurped Power is available from the Insurance Institute of London (Research Study Group Report 258).
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
which covers damage due to acts of war
War
War is a state of organized, armed, and often prolonged conflict carried on between states, nations, or other parties typified by extreme aggression, social disruption, and usually high mortality. War should be understood as an actual, intentional and widespread armed conflict between political...
, including invasion
Invasion
An invasion is a military offensive consisting of all, or large parts of the armed forces of one geopolitical entity aggressively entering territory controlled by another such entity, generally with the objective of either conquering, liberating or re-establishing control or authority over a...
, insurrection, rebellion
Rebellion
Rebellion, uprising or insurrection, is a refusal of obedience or order. It may, therefore, be seen as encompassing a range of behaviors aimed at destroying or replacing an established authority such as a government or a head of state...
and hijacking
Carjacking
Carjacking is a form of hijacking, where the crime is of stealing a motor vehicle and so also armed assault when the vehicle is occupied. Historically, such as in the rash of semi-trailer truck hijackings during the 1960s, the general term hijacking was used for that type of vehicle abduction,...
. Some policies also cover damage due to weapons of mass destruction
Weapons of mass destruction
A weapon of mass destruction is a weapon that can kill and bring significant harm to a large number of humans and/or cause great damage to man-made structures , natural structures , or the biosphere in general...
. It is most commonly used in the shipping
Shipping
Shipping has multiple meanings. It can be a physical process of transporting commodities and merchandise goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...
and aviation
Aviation
Aviation is the design, development, production, operation, and use of aircraft, especially heavier-than-air aircraft. Aviation is derived from avis, the Latin word for bird.-History:...
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.
Private war risk insurance policies for aircraft were temporarily cancelled following the September 11, 2001 attacks
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
and later reinstated with substantially lower indemnities. In the wake of this cancellation, the US federal government set up a terror insurance program to cover commercial airlines. The International Air Transport Association
International Air Transport Association
The International Air Transport Association is an international industry trade group of airlines headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organization is also headquartered. The executive offices are at the Geneva Airport in SwitzerlandIATA's mission is to...
has argued that airlines operating in states which do not provide war risk insurance are at a competitive disadvantage in this area.
A detailed study of the Insurance of War Risks and Terrorism, including related perils such as Strikes, Riots, Civil Commotion, and Military or Usurped Power is available from the Insurance Institute of London (Research Study Group Report 258).