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War risk premium

An additional premium negotiated voyage by voyage for a vessel's passage through a war zone, revisable in near real time.

Definition

The marine war risk premium does not cover a stable hazard. It posts a price that tracks, day by day, how dangerous a zone is. Negotiated by voyage and by endorsement, backed by covers cancellable at seven days' notice, it can triple or quadruple within days of an attack. Economically it works mainly as a signal. A few well-aimed attacks are enough to push it to the point where the transit no longer pays, and it then becomes the instrument of a de facto blockade.

Its 3 cross-references, woven across the glossary's 18 categories
War risk premium: Insurance glossary illustration, AlgoPolis
Example

After two Greek bulk carriers sank in July 2025, the Red Sea war risk premium rose from around 0.3% to nearly 1% of hull value.

Read next
InsuranceJoint War CommitteeA London market committee that designates marine war risk areas and revises cover guidance, sometimes weekly.Read the entry →InsuranceWar exclusion clause (NMA 464, LMA cyber war)Removes war, civil war and hostile acts from cover: the NMA 464 wording of 1938, the Merck NotPetya ruling, and the LMA cyber war clauses.Read the entry →Special risksMarine war riskCover protecting ships and cargo against war, piracy and seizure perils, excluded from standard marine policies.Read the entry →
Put it to work
SimulatorPlay this case from the underwriter's seatEight quarters, one book, cyber and political risk files. You set the price and the war clause, then the market answers back.Take the seat →
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