War risk coverage
Marine insurance covering war-related losses, now critical as Gulf tanker routes collapse.
Last refreshed: 30 March 2026
Is commercial shipping in the Gulf effectively uninsurable while the Iran war continues?
Latest on War risk coverage
- What is war risk coverage?
- War risk coverage is a specialist marine insurance clause that pays out when a ship or its cargo is lost, damaged, or seized due to acts of war, mines, or hostile action. It is sold separately from standard hull and P&I policies, which exclude war as a matter of course. Underwriters can cancel it at short notice when risk becomes unquantifiable.Source: International Maritime Organisation
- Why did P&I clubs cancel Gulf war risk coverage in March 2026?
- American Steamship Owners Mutual P&I, London P&I Club, and Skuld issued cancellation notices effective midnight 5 March 2026, citing the IRGC blockade of Hormuz. Without P&I cover, vessels cannot obtain port clearance or commercial financing, effectively grounding Gulf-bound tankers regardless of their willingness to transit.Source: P&I club cancellation notices
- Is the US providing war risk insurance for Gulf shipping?
- Yes. President Trump announced that the US Development Finance Corporation would provide political risk insurance for US-aligned maritime trade in the Gulf, backed by potential Navy escorts through Hormuz. The arrangement covers ships under US or allied flags; Chinese, Russian, and Indian tankers are not included.Source: DFC announcement
- What is the difference between war risk coverage and standard P&I insurance?
- Standard P&I (Protection and Indemnity) insurance covers third-party liabilities such as crew injury, cargo damage, and oil spills under normal trading conditions. War risk coverage is a separate, cancellable policy that specifically covers losses attributable to armed conflict, piracy, mines, and hostile seizure. P&I clubs can cancel war risk with 48-72 hours notice; standard P&I has longer cancellation periods.Source: International Group of P&I Clubs
- How much did Gulf war risk premiums increase in 2026?
- Premiums became effectively incalculable after P&I clubs cancelled outright in early March 2026. Before cancellation, rates had risen sharply alongside VLCC freight rates, which hit an all-time high of $423,736 per day — a 94% increase in a single week — as shipowners priced conflict risk into charter rates in lieu of available insurance.Source: VLCC freight market data
Background
War risk coverage is the marine insurance clause that pays when a vessel or cargo is lost through acts of war, mine strikes, or hostile seizure. Standard P&I and hull policies exclude war; shipowners buy it separately through syndicates at Lloyd's of London and mutual clubs such as Skuld, the London P&I Club, and the American Steamship Owners Mutual P&I. Premiums surge whenever a waterway becomes contested; the Persian Gulf has triggered war risk exclusions in every major tanker conflict since the 1980s Tanker War.
Three major P&I clubs cancelled Gulf and Gulf of Oman war risk coverage with 72 hours' notice from 2 March, effective midnight 5 March, leaving vessels without the insurance required to obtain port clearance or financing. VLCC freight rates hit an all-time high of $423,736 per day as shipowners priced the elevated risk into charter rates.
The US Development Finance Corporation stepped in with government-backed cover for US-aligned shipping, a scale of state intervention not seen since the US War Risk Insurance Act of 1914. Roughly 60% of Gulf oil flows to Asia, and Chinese, Russian, and Indian tankers operate under separate commercial arrangements, leaving the collapse unresolved for the bulk of Gulf trade.
