William McMichael article on "War! What Is It Good For? Helping Your Business Avoid Insurance Coverage Battles for Losses Flowing from the Russo-Ukrainian Conflict"
In a recent Shale Magazine article, William McMichael, associate in our Insurance practice, discusses the business insurance implications of the Russo-Ukrainian conflict, including recent relevant court rulings, and shares steps businesses can take to maximize recovery for potential losses flowing from the conflict.
Nearly all modern insurance policies include some version of a ‘War Exclusion,’ a standard provision that excludes coverage for losses arising out of ‘war’ or ‘warlike action.’ However, the path to recovery may not be as bleak as one might anticipate, advises McMichael, who specializes in complex insurance coverage. He further notes that whether a loss flowing from the Russo-Ukrainian Conflict is barred from coverage requires highly fact-intensive analysis.
“There will be an ocean of claims that cite the Russo-Ukrainian conflict as the basis for the loss,” says McMichael. “While the plain language of many ‘War Exclusions’ bars coverage for losses that ‘indirectly arise’ out of a conflict, nearly all states’ laws interpret ‘arising out of’ language to mean ‘proximate cause.’ This is particularly relevant in the War Exclusion context, as there may be losses that are the ultimate result of the war, but which the war did not directly cause (e.g., increase in fuel prices because of embargo on Russian oil). Policyholders should be careful to articulate the cause for their loss in a clear manner, and to anticipate insurer’s arguments as to why a loss may not be covered.”