War And Office Of Foreign Assets Control Exclusions: Insurance Policy Language Matters

Nearly two weeks into the Russian invasion of Ukraine, numerous companies are focused on how the war might impact their business, including their insurance coverage. This advisory provides a high-level overview of two types of insurance exclusions that may be implicated: war exclusions and OFAC exclusions.

War exclusions

In numerous insurance policies over the past century, "war" exclusions have become a standard coverage term that often goes unnoticed. With a hardened insurance market and in the face of novel risks in the modern world, the industry has reassessed legacy language to add expanded "war" exclusions in insurance policies. For example, at the end of 2021, the Lloyd's Market Association released four model clauses to specifically exclude coverage for "cyber war" from cyber insurance policies. However, consideration of the definition of "war" certainly doesn't stop with cyber insurance.