What is war-risk insurance?
Standard marine, aviation, and property insurance policies explicitly exclude losses caused by war and terrorism. War-risk insurance is a separate, specialized product that fills this gap.
Ship owners, cargo owners, and airlines buy war-risk insurance to protect against:
- Damage or destruction from military action
- Seizure of vessels or cargo by governments
- Mines, torpedoes, and other naval weapons
- Detention in conflict zones
Why does it matter for consumers?
Without war-risk insurance, ship owners refuse to sail into dangerous waters. This means:
- Oil tankers won’t enter the Strait of Hormuz
- Container ships avoid the Gulf entirely
- Goods that normally transit the region must be rerouted
- Every rerouted shipment costs more time and money
These extra costs flow directly to consumer prices on gas, groceries, electronics, and everything else that moves by sea.
What’s happening now?
After Iran declared the Strait of Hormuz “closed,” insurers took dramatic action:
- War-risk premiums surged 5-12x for Gulf transit
- Some insurers cancelled coverage entirely
- Marine hull insurance could rise 25-50% in the Gulf region
- VLCC (Very Large Crude Carrier) freight rates hit $423,736/day — up 94% in a single day
Sources: Al Jazeera, Reinsurance News