Aviation War Risk Insurance
A variety of risks are excluded from policies issued through Lloyd's of London written to provide coverage for damage to aircraft and for liability of aircraft owners or operators to third parties. The "war-risk" exclusion provides:
This Policy does not cover claims caused by:
(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power, or attempts at usurpation of power.
(b) Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
(c) Strikes, riots, civil commotions, or labor disturbances.
(d) Any act of one or more persons, whether or not agents of a sovereign Power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional.
(e) Any malicious act or act of sabotage.
(f) Confiscation, nationalization, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government (whether civil, military, or de facto) or public or local authority.
(g) Hijacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the Insured.
Furthermore this Policy does not cover claims arising while the Aircraft is outside the control of the Insured by reason of any of the above perils. The Aircraft shall be deemed to have been restored to the control of the Insured on the safe return of the Aircraft to the Insured at an airfield not excluded by the geographical limits of this Policy, and entirely suitable for the operation of the Aircraft (such safe return shall require that the Aircraft be parked with engines shut down and under no duress).
If not available commercially, war-risk coverage may be obtained through the U.S. Department of Transportation. Such coverage, if not otherwise reasonably available, is provided to American or foreign flag carriers engaged in operations determined by the President "to be necessary in the interest of air commerce or national security or to carry out the foreign policy of the United States Government."
Despite the breadth of the war-risk exclusion, there are circumstances in which a dispute may arise between issuers of all-risk policies and war-risk policies. For example, a court ruled that destruction of a hijacked aircraft should be covered under an all-risk policy rather than a war-risk policy because the hijackers belonged to a radical political group rather than the military of a sovereign government. Such a dispute will not arise if war risks and other risks are insured under the same policy. However, if separate policies insure against such risks, an understanding between the insurers may be sought to provide that pending determination of the each insurer's liability, the insurers should split payment of the total claim.
After September 11th, 2001, terrorism exclusions were added to property and general liability policies. Rates in the property and casualty market rose greatly. The Terrorism Risk Insurance Act, effective November 26, 2002, established a program within the Department of the Treasury under which the federal government shares the risk of loss from future terrorist attacks with the insurance industry. All insurers--direct, surplus lines, and alien--that write primary and/or excess property/casualty insurance for U.S. risks, including aviation and shipping, are required to participate in the program; make coverage available for terrorism losses in all of their property/casualty coverages; and offer coverage in a manner that does not differ materially regarding terms, amounts or other limitations of coverage offered for acts other than terrorism.
Copyright 2008 LexisNexis, a division of Reed Elsevier Inc.
