War, Marine-War and Aviation-War Exclusions: A Corporate Programme Gap Audit for Indian CFOs After the May 2025 Escalation

When Indian and Pakistani forces exchanged strikes between 7 and 10 May 2025 during Operation Sindoor, the immediate operational shock for corporates was aviation. More than two dozen airports across northern and western India suspended civilian operations, Pakistan closed its airspace, and cargo movement on the western border, already halted after the April Pahalgam attack, stayed frozen. Within days risk managers were asking a question their programmes were not built to answer: if a missile, an air strike or a cross-border incursion damaged a plant, a warehouse or an aircraft, would any policy respond?

The instinct of many boards was to reach for the terrorism cover they had bought through the market pool. That instinct is misplaced. The Indian Market Terrorism Risk Insurance Pool (IMTRIP), administered by GIC Re, responds to terrorism, not to war, invasion, or the act of a foreign enemy. A state-on-state military exchange sits squarely inside the war exclusion that runs through almost every Indian commercial wording, and the pool's own terms carve war out explicitly.

That distinction is why a programme-wide audit matters. War, war-on-land, marine-war and aviation-war exclusions do not appear in one place. They are drafted into the fire policy, the marine cargo cover, the hull slip and the aviation contract in different language, with different buy-back routes and different termination mechanics. A CFO who audits only the property tower will miss the cargo in transit, the vessels on water and the fleet on the tarmac. This post maps where each exclusion bites across the corporate programme, what IMTRIP does and does not reach, and where marine-war and political-violence buy-backs are actually available in the Indian market.

The fire policy carries a war exclusion most boards never read

The Standard Fire and Special Perils Policy (SFSP), the base of nearly every Indian property programme, excludes loss or damage caused by war, invasion, act of foreign enemy, hostilities or warlike operations (whether war be declared or not), civil war, rebellion, insurrection and military usurped power. This is not negotiable market wording; it is the standard exclusion filed with IRDAI. No property underwriter in the domestic market writes it back.

Boards assume the terrorism add-on closes this gap. It does not. When a corporate buys terrorism cover, the risk is ceded to IMTRIP, and the pool wording defines terrorism as an act of force or violence for political, religious or ideological ends by a person acting on behalf of or in connection with an organisation. A conventional military strike by a nation state is not that. The pool's exclusions restate war, invasion and warlike operations as outside its scope, so the very event a May 2025 style escalation produces is the event the terrorism pool declines.

That leaves a genuine void on land assets. Standalone political violence policies, discussed later, can be extended in some structures to include war and civil war for Indian situs risks, but this is a specialist placement, usually offshore or through Lloyd's India and foreign reinsurance branches, and not a domestic filed product. The first audit finding for most CFOs is blunt: their largest fixed assets, the plants and warehouses, carry no war cover at all.

Clause 6 excludes war, and the Institute War Clauses buy it back

Marine cargo is the one line where war cover is routinely available, but only if it has been arranged deliberately. The Institute Cargo Clauses (A), (B) and (C) exclude war, civil war and hostile acts by or against a belligerent power at clause 6, the war exclusion. That exclusion is then bought back through the Institute War Clauses (Cargo), CL385, which restores cover for war, civil war and derelict mines, torpedoes and bombs, but only while the goods are waterborne (or airborne), under the classic warehouse-to-warehouse cover modified by the transit rule.

This waterborne limitation is the trap. War cover on cargo generally attaches as the goods are loaded on the overseas vessel and terminates on discharge at the final port, or on expiry of set time limits if the goods are not discharged. Goods sitting in a container freight station, an inland container depot or a bonded warehouse near a conflict zone typically fall outside war cover even where the marine transit cover continues. During the May 2025 border closures, cargo stranded at western ports and land customs stations sat in exactly this exposed window.

Two further mechanics deserve audit attention. War risk cover on cargo carries an automatic termination and a cancellation provision: underwriters can cancel war and strikes cover on seven days notice, and rates can move sharply as a corridor heats up. Separately, CL380, the Institute Cyber Attack Exclusion Clause, sits alongside these clauses and removes loss caused by a cyber operation used as a weapon, a live issue when hostilities include digital attacks on port or logistics systems. A cargo programme can look complete on the schedule and still leave storage, cyber and cancellation gaps.

AVN48B, LSW555 and the mechanics of automatic termination

Marine hull follows a parallel structure. The standard hull cover excludes war and strikes, and shipowners or charterers buy the risk back through the Institute War and Strikes Clauses (Hull), often paired with a listed-areas regime where transit into a designated high-risk area triggers additional premium and prior notification. Vessels calling at ports near an active conflict, or transiting a corridor a war committee has listed, face both higher rates and the possibility that cover is withdrawn on short notice.

Aviation is where the May 2025 shock was sharpest, and where the exclusion is most absolute. The standard aviation hull and liability wording carries the War, Hi-jacking and Other Perils Exclusion Clause, AVN48B, which strips out war, invasion, acts of foreign enemies, strikes, confiscation and hijacking. Airlines and lessors restore parts of this through the aviation war write-backs, the AVN52 series for third-party war liability and separate hull-war placements written on LSW555 terms in the London market. Indian carriers and the GIFT City aircraft lessors rely on these offshore war placements because the domestic market does not write aviation war on land.

For a corporate with an owned or leased fleet, ground equipment and aircraft on the tarmac at northern airports during the closures, the audit question is precise: is aviation-war written back on the hull, is third-party war liability sitting at an adequate AVN52 limit, and who is watching the cancellation clock.

Political violence is the market segment that sits between the terrorism pool and true war cover, and it is where most of the remaining gaps are actually filled. A standalone political violence policy is built as a menu. At the narrow end it covers terrorism and sabotage. It then extends, peril by peril, to riots, strikes and civil commotion, malicious damage, insurrection, revolution and rebellion, and at the widest end to war and civil war. Each step out is separately rated and separately agreed, so two policies both labelled political violence can cover very different events.

For Indian corporates, this market is accessed largely through Lloyd's India, foreign reinsurance branches and offshore placements, because the domestic filed products stop at terrorism (via IMTRIP) and the SFSP special perils. A full political violence extension can bring war on land back into a property programme, close the storage gap the marine war clauses leave, and provide a single trigger across sites that the pool cannot. The trade-off is cost, aggregate limits by location, and careful drafting of the war and civil war write-back so it aligns with, rather than contradicts, the underlying property wording.

Contingent exposures need the same lens. A plant that is undamaged can still lose output if a supplier, a port or a power corridor is hit by a war-excluded event, and standard contingent business interruption will not respond where the proximate cause is war. The May 2025 airspace and border closures were largely non-damage disruptions, revenue lost without physical loss, which most property-linked business interruption does not reach. Political violence structures and specialist trade disruption cover are the only market answers, and they must be bought before the corridor is in the news, not after.

Seven questions to run across the whole programme

A war-exclusion audit fails when it is run line by line in silos. The exposure is correlated: one escalation hits the plant, the cargo, the vessels and the fleet at the same moment, so aggregation across the programme is the real question. The following sequence turns the exclusion map into a board-level checklist.

1. Property and fire: confirm the SFSP war exclusion is unbought, quantify the fixed-asset value with no war cover, and decide whether a political violence war-on-land extension is warranted for key sites.
2. Marine cargo: check that Institute War Clauses (Cargo) cover is in force, and map the storage windows (CFS, ICD, bonded warehouse) where the waterborne limitation leaves goods exposed.
3. Marine hull: verify the Institute War and Strikes (Hull) buy-back, listed-area notification duties and the cancellation notice period.
4. Aviation: confirm AVN48B is written back for hull-war and that AVN52 third-party war liability limits match contractual and lessor requirements.
5. Business interruption: test whether any non-damage or contingent BI responds to a war-excluded closure, and price the revenue at risk if none does.
6. Cyber overlap: read CL380 and the cyber war exclusions together, because a hostilities-linked cyber event can be excluded on both the marine and the cyber tower.
7. Aggregation and cancellation: build a single view of total war-excluded exposure and a monitoring process for the seven-day cancellation clocks on hull and aviation war.

Run in this order, the audit produces a defensible number: the value of assets, cargo and revenue for which no policy will pay after a state-on-state escalation. That number, not a general reassurance about terrorism cover, is what a CFO should take to the board.

The recurring lesson from the May 2025 episode is that war exclusions are scattered across a programme in different wordings, and the gaps live in the differences: a waterborne limitation here, a seven-day cancellation there, an AVN48B write-back that was never bought. Finding them means reading the actual clauses across the fire, cargo, hull and aviation slips, not relying on a summary schedule.

This is the work Sarvada is built for. Sarvada makes insurer policy wordings searchable across the Indian market, so a broker or risk manager can pull the exact war, marine-war and aviation-war exclusion language from each carrier's filed and slip wordings, compare buy-back and termination provisions side by side, and evidence to the board precisely where the programme is exposed. If you are running a cross-line war-exclusion audit for a corporate client, request access to see how a wordings-level search turns a scattered set of exclusions into a single, defensible gap map.