War Exclusions in Insurance: When Your Policy Won't Pay

You bought a policy, paid every premium on time — and then something hit. Literally. And your insurer sent back a three-page denial citing clause 5.2. It’s a scenario hundreds of Ukrainian businesses and homeowners have lived since 2022.

The problem isn’t just insurer greed — though that’s part of it. The real issue is that war exclusions and related clauses have existed for decades. They’re legal, and when precisely worded, courts will uphold them. But here’s what matters: not all war exclusion language is equally airtight. The difference between a payout and a denial lives in the details.

So let’s go through the specific clauses appearing in Ukrainian contracts — not abstractly, but with actual language and the legal consequences of each.

# War Exclusion Wording in Ukrainian Insurance Policies

A standard war exclusion in a Ukrainian policy reads something like this — and this is not fiction:

“The insurer shall bear no liability for losses caused directly or indirectly by: war, invasion, acts of a foreign enemy, military operations (declared or undeclared), civil war, insurrection, revolution, mutiny, military coup or seizure of power.”

The critical phrase: “directly or indirectly.” That connector stretches the exclusion dramatically. A drone hits a warehouse in Odesa — direct military damage. The building next door catches fire and spreads to yours — indirect. Both fall under the war exclusion if the wording includes “or indirectly.”

Then there’s the looser version — “military actions or their consequences.” That one’s vulnerable to challenge. Consequences of what? Inflation as a consequence of war? Article 979 of Ukraine’s Civil Code says ambiguous contract terms are interpreted in favour of the party who didn’t draft them — meaning the policyholder.

Three formulations, three levels of insurer protection:

Strong clause (court will uphold): “losses caused directly or indirectly by war, invasion, acts of the armed forces of any state, undeclared war.”

Medium clause (courts may interpret either way): “losses resulting from military action” — no further detail.

Weak clause (open to challenge): “force majeure, including military events” — without specifying actors or types of action.

For what it’s worth, Ukrainian insurers have tightened their wording considerably over the past three years — specifically after early court losses.

# How Terrorism Exclusion Differs from War Exclusion

The difference is fundamental — and for a policyholder, it can mean money.

Terrorism exclusion covers losses from “terrorist acts, sabotage, deliberate destruction aimed at intimidation.” War exclusion covers acts by state armed forces. In practice the line blurs.

Russian missile strikes on civilian infrastructure were consistently classified by Ukrainian insurers between 2022 and 2025 as war exclusion events — state military aggression by the Russian Federation, not terrorism. That classification matters, because some older policies include terrorism exclusion but not war exclusion, or vice versa.

Here’s the edge case worth knowing: if your contract contains only a terrorism exclusion and no war exclusion, losses from a state military missile strike theoretically don’t fall under any exclusion. That’s rare in policies written after February 24, 2022 — but it turned up in older contracts.

The play? Read the exclusions section literally. If the word “war” or “armed conflict” isn’t there, you have an argument.

# Force Majeure in Insurance: Does It Help or Hurt Your Claim?

This is the most common misconception. People assume: “War is force majeure, so the insurer has to pay.” Wrong. It’s the opposite.

Under Ukrainian law, force majeure refers to circumstances of irresistible force that release a party from liability for non-performance of an obligation (Article 617 of Ukraine’s Civil Code). The Ukrainian Chamber of Commerce and Industry (UCCI) has been issuing force majeure certificates since February 24, 2022 — primarily so businesses could avoid contractual penalties.

But insurers flipped the logic. If a contract says “the insurer is released from payment upon the occurrence of force majeure circumstances,” then war — as force majeure — becomes grounds for denial, not payment. A UCCI certificate in that scenario confirms the event happened, but creates no obligation to pay.

The contradiction is real: a policyholder obtains a force majeure certificate to prove they suffered a genuine loss. The insurer uses the same document to invoke the force majeure escape clause.

Legally, what controls is the specific contract language. If it says “force majeure releases the insurer” — that’s enforceable under Ukrainian law. If it only says “the insured event excludes military action” — the insurer can’t lean on force majeure as a separate exit.

# Civil Unrest Exclusion: When Riots Aren’t War but Still Aren’t Covered

Civil unrest is a distinct category — and it shows up in contracts more often than most people realise.

Typical language: “losses arising from civil disturbances, riot, insurrection, strike, lockout.” Sounds neutral. But in 2022–2025, insurers attempted to apply civil unrest exclusion to front-line regions where property was destroyed not by missile strikes but during ground fighting — including looting and chaos during evacuations.

Courts interpreted this inconsistently through 2025. Where damage was clearly caused by foreign armed forces — war exclusion applied. Where property was destroyed in panic, looting, or localised clashes — civil unrest came into play.

But civil unrest exclusion doesn’t automatically mean denial. If the wording doesn’t include “or as a result of military action,” looting during an evacuation could theoretically be covered under a standard theft clause. That’s exactly how a number of Ukrainian sole proprietors (FOP — the Ukrainian small-business legal structure) received payouts in 2023 — not for missile damage, but for equipment stolen during chaotic evacuations.

# CASCO in Ukraine 2024–2025: Does It Cover Shelling Damage to a Vehicle?

Short answer: no. Almost never.

Ukraine’s standard CASCO contract — each insurer writes its own rules, but registers them with the NBU — contains war exclusion as a baseline requirement. According to NBU data (the insurer rules registry at bank.gov.ua), none of the top-10 insurers by premium volume in 2024 offered CASCO with war risk coverage as a standard option.

What does standard CASCO cover? Road accidents, theft, natural disasters (without a military angle), glass damage, fire. That’s it.

Blast-wave damage is where it gets interesting. Some insurers tried to classify shockwave damage as “natural disaster” (shockwave ≈ atmospheric pressure event) rather than military damage. Courts in 2023–2024 mostly sided with insurers: the source of the explosion — a missile — directly points to military origin.

But — and this matters — if a vehicle was damaged by falling debris from a building destroyed in a strike, and the police report describes it as “falling object” rather than “consequence of military action,” there’s a legitimate basis for a claim. Documentation is everything.

# Business Property Insurance: What Happens After a Missile Strike?

For businesses, losing a warehouse or office isn’t just about the building. It means downtime, lost inventory, broken contracts. That’s why you need to read not just the main property policy, but the Business Interruption (BI) conditions as well.

Standard BI policies carry the same war and terrorism exclusions as the underlying property contract. Worse: BI coverage is often contingent on the property policy — if the property claim fails due to war exclusion, the BI claim fails automatically.

What actually worked for Ukrainian businesses in 2022–2025:

1. Cargo and freight insurance. International carriers sometimes held Lloyd’s policies with war coverage on routes outside active combat zones. Coverage inside Ukraine was a separate, expensive conversation.
2. Export credit insurance. Ukraine’s State Credit Service (DKS) provided guarantees on certain export transactions — not classic insurance, but financial protection.
3. Lloyd’s / MIGA coverage. For large investments (from $1 million), the Multilateral Investment Guarantee Agency (MIGA, part of the World Bank) offers political risk coverage including war. The threshold makes it irrelevant for small business.

For most Ukrainian SMEs — here’s the honest answer: a standard property policy doesn’t pay out after a missile strike. That’s not malice. It’s product design that predates 2022 by decades.

# How the State Compensates What Insurers Won’t

State programmes aren’t a substitute for insurance. But in the current environment, the eVidnovlennya (Restoration) scheme via Diia has become the primary tool for individuals.

How it works: a citizen files an application through Diia (Ukraine’s government services app), a commission assesses the damage, and compensation is calculated. According to Ukraine’s Ministry of Digital Transformation (2024), average eVidnovlennya payouts per household ran between UAH 200,000 and UAH 500,000 (roughly $5,000–$12,500) — depending on the severity of damage. That’s not market value for destroyed property, but it’s real money.

For businesses, the path is harder. The eRobota programme and DKS guarantees partially offset losses, but not direct property destruction. Each case needs individual legal analysis.

One clarification worth making: state compensation and insurance payouts aren’t mutually exclusive. If an insurer denied a claim on war exclusion grounds, that doesn’t block you from applying for eVidnovlennya. But receiving double payment — from both the insurer and the state — for the same loss is illegal.

# What to Check in a Policy Before Signing

Three minutes of reading before you sign can save months of litigation after.

Step one — find the Exclusions section (usually Section 4 or 5 of the policy rules). Look for: war, military, hostilities, armed conflict, civil unrest, terrorism, force majeure. Find any of those — read the exact wording.

Step two — check for “directly or indirectly.” If that phrase is there, any loss with even a remote connection to military events falls under the exclusion. “Directly” only is meaningfully better for policyholders.

Step three — look for a war rider. Some insurers offer it as a separate policy add-on. It comes with its own sum insured, its own premium (expensive — from 3% of the insured amount per year), and its own claims process. Without the rider, war coverage doesn’t exist regardless of anything else in the contract.

Step four — check the notification deadline. Standard deadline: 3 business days. During wartime, evacuation, or communications blackouts — that’s unrealistic. File your claim a month late and the denial will be procedural, not even about war exclusion. Contracts with extended notification windows (30 days) exist, but they’re rare.

And one final thing: if an agent verbally tells you that shelling is covered — get it in writing as a signed contract addendum. In Ukrainian insurance, verbal assurances carry zero legal weight.

# See Also

• Property and financial risk insurance
• Business loans in Ukraine
• Banking and financial tools for business