Skip to main content
main content, press tab to continue

Political violence versus political risk insurance coverage

By Laura Burns | April 26, 2022

Understanding the difference between political violence and political risk insurance.
Credit and Political Risk
Ukraine war

The crisis in Eastern Europe is provoking many organizations with exposure to the region to question the extent to which potential losses may be treated under their insurance contracts.

As hostilities continue, the situation for firms operating in the region grows ever starker. Be it the direct effects of sustained physical damage, the forced abandonment of operations, or disruption to supply chains, a reassessment of business practices and investment strategies will be needed to mitigate long-term impact to the bottom line. As the focus inevitably turns to insurance, both force majeure clauses (a point of recent contention with respect to the pandemic) and war exclusions will be in the spotlight.

For operations located in Ukraine itself, the impact of the conflict is palpable. However, insurance coverage which indemnifies damage resulting from war will likely be excluded from traditional property policies, whether purchased locally or from a global insurer.

For this reason, many organizations with an international presence purchase political violence insurance. It can be purchased on both a standalone basis (only political violence) or as part of a political risk insurance policy (discussed later). This is typically non-cancellable and covers property damage and resulting business interruption losses following war, civil commotion and even terrorism (see Figure 1). Such policies may even protect a firm’s ‘contingent exposures’, such as the impact on the business from losses affecting third-party suppliers.

Graphic showing the scope of insurance coverage for terrorism & sabotage, political violence and full political risk insurance
Figure 1: Scope of political risk insurance

Not withstanding the relative breadth of protection offered under a political violence policy, insurers often apply varying definitions to the covered perils. With regards to terrorism, for example, some underwriters may require an attack to have a clear political, religious or ideological motive, whereas others may adopt a broader stance based on the mode of assault. A clear understanding of the coverage purchased is crucial for risk managers to determine the most effective claims strategy under these contracts.

Extending beyond the physical damage to property and business interruption of a political violence loss, firms operating in the region face several other political perils that have come into focus during this crisis. Political risk insurance supports a company with these additional perils (plus the political violence already addressed). For example, in Ukraine, a company may not suffer physical damage to their property but may need to abandon a location or the assets in the entire country (“forced abandonment”) due to the security situation in which, understandably, many companies have been unable to continue to operate.

Additionally, companies face complexity in assessing losses related to an increasingly strict suite of sanctions placed on Russian assets. With the Russian government indicating the potential nationalization of companies exiting the country, the economic consequences to foreign-owned operations could be severe. Political risk insurance typically covers not only acts of expropriations by a “host country” (in this case, Russia) but also extends to cover forced divestitures if the insured’s country of domicile requires it to sell off shareholdings, the inability to convert or repatriate funds, to export or import goods or tangible assets to or from the host country, and the incurred and unreimbursed expenses related to frustrated sales or investment contracts. As such, political risk policies tend to be more comprehensive in their scope, and while typically costlier than political violence coverage, provide protection against the capricious acts of governments which could permanently impact a company’s long-term strategy. A key characteristic of political risk insurance policies is that they are typically multi-year programs with policy periods often three, five, and upwards to 20 years. The coverage is non-cancellable during that entire period and underwriters cannot increase the rate, which affords the investor with stability of coverage during that time.

In the current environment, it is vital for organizations with suspected exposure to losses in the region to pay particular attention to claims notice clauses within their insurance policies. Most political violence and political risk contracts will have timely notification periods for situations which might give rise to a loss, and risk managers should consult with their brokers as to how best to navigate these requirements.

Moreover, the potential for spillover effects from the crisis is vast, and a key takeaway for companies is to consider such coverages in advance of the next crisis, while capacity is plentiful, and rates are reasonable.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for losses relating to the Ukraine conflict. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include coverage relating to the Ukraine conflict. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third-party sources we consider reliable; however, we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. -The Ukraine conflict is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.


Senior Vice President, Political Risk, Americas,

Laura leads WTW’s political risk solutions in the America’s with over a decade of experience in political risk.


Fergus Critchley
Head of Crisis Management, North America

Related content tags, list of links Article Credit and Political Risk Ukraine war
Contact us