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The Meaning of the 'War Exclusion Clauses' In Cyberinsurance

By Isha Marathe
October 01, 2022

Russia's invasion of Ukraine is a reminder that modern conflicts can spur cyberthreats well beyond a war's frontlines.

The Eastern European conflict is already adding stress to already strained domestic relationships in the U.S. — between businesses and cyber insurance companies. As businesses face more cyberthreats than ever before, many are seeing higher premiums. Meanwhile, insurance companies are looking for ways to skirt coverage obligations that end up proving far too expensive. In fact, some providers are losing profit at a high enough rate to leave the marketplace altogether, adding even more pressure on the remaining players.

To be sure, cybersecurity experts don't see the tension between the two sides easing any time soon. This environment is likely to spur more lawsuits against insurance providers denying coverage. One central focus of litigation is likely to be the "War Exclusion Clause," which exempts the insurer from covering damages from war-like acts between sovereign entities.

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