Horn of Africa Declared a War Zone - Impact on Yacht Insurance Policies
The Joint War Committee (JWC), comprising of underwriting representatives from both Lloyd’s of London and the International Underwriting Association of London (IUA) company markets, have declared the area of the Indian Ocean beyond the eastern Somalia and Gulf of Aden areas out to 600 nautical miles from the coast of eastern Africa south of latitude 15° N and north of latitude 10 S° (excluding the coastal waters of Kenya and Tanzania up to 12 nautical miles offshore) - to be a War Zone.
This effectively means yacht insurance policies will not include war and related perils in this area. It does not mean that cover is unavailable for yachts in the Red Sea, the restrictions relate to War and Associated Risks. Yachts policies continue to cover the normal range of marine perils such as groundings, collisions, rig failures etc.
Joint War Committee Listed Areas
Insurance of civil disturbance and terrorism risks, falling as they do within a majority of "war clauses", will NOT be available in the Joint War Committee (JWC) Listed Areas. From time to time, the JWC releases a list of Areas of Perceived Enhanced Risk. See here for the latest Listing issued 7 January.
The recent change in the JWC Areas is in response to the increased incidents of piracy in the Gulf of Aden and off the coast of Somalia. If you look through the listed areas, some are fairly obvious, others less so. The listed areas are reviewed and changed regularly and in fact were last altered prior to the 7th January on 13th August 2008. Not only do they relate to areas owing to the threat of war, but also areas where this is a known terrorism risk or ongoing civil war and indeed piracy.
What is War, Strikes, Terrorism and Related Perils?
Usually it includes some or all of the following, but the wording of any war clause can vary between insurers:
· War, civil war, revolution, rebellion, insurrection, civil strife, or any hostile act by or against a belligerent power
· Capture, seizure, arrest, restraint or detainment consequence of this or attempts thereat
· Derelict mines, torpedoes, bombs or other derelict weapons of war
· Strikers, locked out workmen, labour disturbances, riot or civil commotions
· Any terrorist or any person acting from a political motive
· Confiscation or expropriation
Piracy is normally a specified peril, but as attacks become more organised and sophisticated it tends to overlap with other perils such as violent theft, acts of terror and riots. Therefore there are moves to include piracy within the War and Related Perils clause.
If circumnavigating, yacht owners need to be aware of the risks of civil disturbance and terrorism and piracy. They need to consider if they need to buy "war cover" and check specifically regarding the matter of piracy. Many insurers only provide terrorism cover if the war cover is purchased for an additional premium. Many owners take war cover at face value and do not always appreciate that declining to buy war cover means they are not covered for civil disturbance and terrorism and perhaps piracy.
Policies Providing War Cover
Policies may exclude War and Related Perils as standard, others may include these risks for an additional premium subject to the JWC listed areas, meaning that War and Associated perils are NOT provided in the listed areas. Additionally under the terms of the policy the insurer can cancel the policy subject to a period of notice (usually 7 days) and then reinstate cover on the basis of the new listed areas. Obviously this can work to the advantage of the yacht owner if areas are removed or to the disadvantage of the yacht owner if areas are extended or added. So in this regard the policy can change at any time from the start of a circum-navigation until the conclusion.
Yacht owners need to check their policies carefully to ensure they have the cover they need and be aware of any increased excess or variation in terms of cover, which may apply in different areas.
All travellers should check Foreign Office websites for advice in certain areas. Most importantly, read your insurance policy and deal with a reputable insurer!
Our thanks to Admiral Marina Insurance - www.admiralyacht.com - for assisting with this report.