One of the most common misconceptions during times of crisis is that all stakeholders in the supply chain are automatically aware of evolving risks and that insurance protection continues seamlessly. However, marine insurance operates under specific contractual clauses and timelines that determine when coverage applies and when it may terminate.
Vaidehi Desikan Executive Vice President, Anand Rathi Insurance
As geopolitical tensions intensify around key maritime corridors, businesses involved in global trade must understand how marine insurance responds to disruptions, rerouting, and war-related risks.
Global trade moves across oceans with remarkable efficiency—until geopolitics intervenes. When tensions rise in critical maritime corridors, the impact is felt far beyond the region, disrupting supply chains, freight schedules, and energy markets worldwide. The growing instability around key shipping routes in the Middle East is a stark reminder that maritime risk is no longer a distant concern.
For businesses engaged in international trade, understanding how marine insurance responds to such disruptions has become more important than ever.
One of the most strategically important shipping chokepoints in the world is the Strait of Hormuz. This narrow waterway connects the Persian Gulf to the Gulf of Oman and provides the only sea passage from the Gulf to the open ocean. Nearly one-fifth of the world’s oil passes through this corridor, making it critical to global energy markets. In addition, ports across the Middle East region handle approximately 10 percent of global container traffic.
Given the scale of trade moving through this region, any disruption can have immediate and far-reaching consequences. The potential impacts include volatility in global oil prices, disruptions to international freight movements, supply chain interruptions, and extended transit timelines and logistics costs.
Recognizing these risks, several shipping lines have already begun taking precautionary measures. Some operators have suspended transits through sensitive maritime zones, while others are rerouting vessels or delaying voyages.
Shipping lines have also issued advisories warning shippers about potential delays, schedule adjustments, and operational changes. In some cases, cargo bookings to certain destinations in the region have been temporarily suspended.
In such a volatile environment, businesses involved in international trade must review their risk management strategies—particularly their Marine Transit Insurance coverage.
Common misconception during times of crisis is that all stakeholders in the supply chain are automatically aware of evolving risks and that insurance protection continues seamlessly. However, marine insurance operates under specific contractual clauses and timelines that determine when coverage applies and when it may terminate.
Marine cargo insurance typically consists of three key clauses that together define the scope of protection during transit.
The first is Cargo Cover under the Institute Cargo Clauses (Cargo). This clause protects against physical loss or damage to cargo arising from conventional transit risks such as sinking of a vessel, accidents during loading or unloading, damage during handling, theft, pilferage, or other perils encountered during transportation by sea, air, or land.
The second component is Strike, Riot and Civil Commotion (SRCC) Cover under the Institute Strike Clauses (Cargo). This section covers physical loss or damage caused by strikes, riots, civil disturbances, or related disruptions that may affect cargo while in transit.
The third component is War Cover under the Institute War Clauses (Cargo). This clause provides protection against physical loss or damage caused by war-related perils as defined under the policy wording.
While these clauses are largely standardized across the marine insurance market, a key distinction lies in the duration of coverage, particularly for war risks.
Under normal circumstances, cargo and SRCC coverage typically terminate upon delivery of the cargo at the final destination or 60 days after completion of discharge from the vessel at the final port—whichever occurs first.
War risk coverage, however, operates under much stricter timelines. Under the Institute War Clauses, coverage generally terminates either upon discharge of the cargo from the vessel at the final port of discharge or 15 days after the vessel’s arrival at that port, whichever occurs first.
This shorter coverage period becomes particularly important during geopolitical disruptions. If a vessel diverts to an intermediate port or port of refuge and discharges cargo due to operational or security concerns, war risk coverage will usually continue only for 15 days from the vessel’s arrival at that location. For coverage to remain valid, the insured must provide prompt notice to insurers and, where required, pay any additional premium.
If the cargo is re-shipped within this 15-day window, war risk coverage can reattach and continue until the cargo reaches its final destination, subject to the same termination conditions.
Geopolitical developments may also lead to deviations from the original voyage plan. Vessels may be rerouted, cargo may be transhipped onto another vessel, or shipments may face delays beyond the control of the cargo owner.
In such circumstances, marine insurance policies may still provide protection, but certain conditions must be met. If delays, deviations, forced discharge, or transshipment occur beyond the control of the insured, cargo and SRCC coverage generally continue under their standard duration provisions. War risk coverage may also remain in force, provided insurers are notified promptly and any additional premium required is paid.
Similarly, if there is a change of voyage, immediate notification to insurers is essential so that coverage can be extended or amended appropriately.
In extreme situations, the contract of carriage may be terminated due to circumstances beyond the control of the insured. Even in such cases, continuation of cover under the cargo, SRCC, and war sections may still be possible, subject to prompt communication with insurers and agreement on additional premium where applicable.
In today’s complex logistics environment, businesses must also focus on real-time shipment monitoring. Maintaining close coordination with shipping lines, freight forwarders, and logistics partners helps companies track cargo movements and respond quickly to disruptions.
Accurate documentation is equally critical. Businesses should maintain clear records of voyage details, vessel name, cargo value, applicable INCOTERMS, and the current location of shipments. This information enables faster communication with insurers and supports timely risk mitigation measures.
Global trade depends on the safe and reliable movement of goods across oceans, yet geopolitical tensions continue to introduce new layers of uncertainty. In such circumstances, understanding the technical aspects of marine insurance—particularly war risk coverage—is essential.
Ultimately, the most important safeguard for businesses navigating today’s uncertain maritime environment is prompt communication with insurers and logistics partners.
Early notification, accurate documentation, and proactive risk management can ensure that insurance protection remains intact—even when voyages do not proceed according to plan.
The author is a marine insurance and risk management specialist with over three decades of extensive experience advising businesses on cargo risk and global trade exposures.She is presently the Practice Leader – Marine,Cargo and Logistics Business at Anand Rathi Insurance Brokers. She can be reached @ vaidehidesikan@rathi.com