Automatic termination clause (five powers war)
Clause in marine and aviation war policies that ends cover automatically on war between the UK, US, France, Russia and China, a hostile nuclear detonation and, in marine, requisition of the vessel. Insurer and insured may also cancel on seven days' notice.
A marine war policy is read first through its termination clause, clause 5 of the Institute War and Strikes Clauses. It holds two mechanisms. The first is notice: the insurer, and the insured too, can cancel on seven days' notice, which lets the market reprice an area that flares up. The second is automatic, with no notice. Cover ends on the hostile detonation of a nuclear weapon anywhere, on the outbreak of war between any two of the five powers, and on requisition of the vessel. The five are the UK, the US, France, Russia and China, the permanent members of the Security Council. The idea is plain: a war among them is uninsurable, since it would take down the market that claimed to cover it. Aviation war policies carry the same arrangement. The seven-day notice has been used several times, and on a massive scale on September 17, 2001, when insurers canceled the third-party war liability of airlines worldwide. The automatic limb needs no war between great powers to bite: requisition of the vessel by a state, for title or use, is enough to end that vessel's cover.
Constructed example: a Greek owner insures his bulk carriers for war with a club and London syndicates. A crisis breaks out in a strait his ships use. The insurers send seven-day notice of cancellation, then offer to reinstate cover with an additional premium for each transit of the area. The owner accepts for two ships and reroutes the other three.
five powers war, five powers clause, automatic termination clause
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