Insurance Exclusion Clauses: Excluding War Risks and Terror Risks from Insurance Contracts [June 14, 2001] [open pdf - 189KB]
"An insurance policy is only as good as the losses it covers. Most insurance and reinsurance policies exclude classes of risks, perils, and exposures from coverage. Common exclusions include war risks, nuclear risks, political risks, and risks on property exceeding a certain value. After September 11, 'it may be that terrorism risk is no longer insurable,' according to Dean R. O'Hare, Chairman and CEO of Chubb, Inc., a major insurer. 'The Terrorism Protection Act,' H.R. 3210, placed on the Senate Legislative Calender [sic] on December 3, 2001, and 'The Terrorism Risk Insurance Act,' S. 2600, laid before the Senate by unanimous consent on June 13, 2002, respond to the widespread exclusion of terrorism risks from insurance contracts. This report provides background on exclusion clauses generally. In particular, it discusses how 'terrorism' risk clauses may be interpreted by the courts, and examines how 'war risk' exclusion clauses have been interpreted by New York (and other) courts. This report also touches on issues unique to the interpretation of reinsurance contracts. The review concludes with a discussion of potential constitutional barriers to retroactive federal and state regulation impairing the private enforcement of exclusion clauses."
CRS Report for Congress, RL31166
University of Texas North Libraries: http://digital.library.unit.edu/