The ongoing conflict in Iran and the related disruption in the Strait of Hormuz continue to create mounting costs for the global shipping industry, revealing gaps in existing coverage, a focus on economic losses rather than physical damage, and concerns about how much premiums may rise.

As shipping companies report their financial earnings from the first half of the year, the Iran war is putting a significant strain on the books, prompting insurance experts to weigh whether coverage is available for these losses.

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For policyholder attorney Jason Kosek, a shareholder at Anderson Kill PC, he expects coverage disputes to potentially arise under whole war policies and the London Blocking and Trapping Addendum, or LPO444.

LPO444 is a marine insurance endorsement within these policies, intended to cover ships trapped in ports or waterways.
These policies often require a continuous stoppage of transportation of either six or 12 months.

Carriers may argue that the stoppage was not continuous, pointing to various posts from President Donald Trump on Truth Social about the status of the war and the Strait of Hormuz.

As a policyholder attorney, however, Kosek argued that would not be a legitimate or fair reading of a policy.

Regardless of a court's potential interpretation of this language, the conflict in Iran will be a "massive hit" to the marine insurance industry and the reinsurance industry, he added, telling Law360 that the losses will be aggregated across hundreds of ships and the market exposure could reach tens of billions of dollars.

"If it's treated as a single event, which is what I think is the proper treatment, as in, it started on Feb. 28, it has the capability to be the largest marine insurance loss in history," Kosek said.
In general, the war in Iran also underscores the importance of proper documentation, Van Osselaer told Law360.

"From a practical standpoint, the companies that will actually recover are the ones that treated this as a claims event from day one, documenting each rerouting decision, segregating incremental costs, and preserving the threat intelligence that drove each operational call," he explained.

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