This CLE webinar will discuss political and war risk coverages and best practices for effectively making claims and securing recovery if losses occur. The panel will offer guidance to insurance practitioners and counsel advising clients with property investments, operations, supply chains, or revenue exposure in high conflict and high risk locations.

Political risk and war risk insurance are increasingly important tools for managing these risks in the global economy that threaten supply chains, offices, projects, and operations of businesses and professions alike. Political upheaval and war can lead to direct and indirect losses from rerouting ships, closure of airspace, additional fees and premiums, expropriation, nationalization, piracy, inability to convert currency, sanctions, cyber attacks, and more. Property or business interruption coverage may not cover these losses. For example, they often require actual physical damage to property, which might not be present if the loss is caused by delay alone, or the policy likely expressly excludes losses from revolution or war. It is essential, therefore, that counsel understand political risk and war risk coverages and how to effectively document and assert claims.

Counsel will want to make sure their client understands all coverages available for each affected location, as well as the scope of coverage, triggering events, notice obligations, and other policy requirements. Choice of law is of great significance and may be unexpected. Multiple policies may exist, and coverage may vary under each. As more than one expert has noted, recovery stands or falls on the meaning of ordinary words and phrases that are often not defined, like “warlike operations,” “hostilities,” “piracy,” “seizure,” “detainment,” “loss,” “costs,” “restraint,” or “constructive total loss.”

When it comes to making effective claims, each individual type of damage or loss should be carefully documented and analyzed to maximize coverage. Instead of a single loss, there may be a number of separate losses and traditional property or BI may offer some coverage. Likewise, timing will be key: these policies may offer coverage for losses occurring before the events giving rise to the losses are determined to be the commencement of war, hostilities, etc., after which a political risk or war risk policy would be triggered.