There is no immediate end in sight to the conflict in the Middle East. Missile and drone strikes have caused widespread destruction to critical infrastructure, commercial buildings, and civilian areas across several countries, including Israel, the United Arab Emirates (including Abu Dhabi and Dubai), Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman.
Airports, ports, energy facilities, and even major commercial centers and hotels have sustained significant damage, and reports indicate the intensity of attacks will only continue. As the conflict continues to engulf the region, businesses with property investments, operations, supply chains, or revenue exposure in or near affected areas face mounting losses across multiple insurance lines and must act quickly to assess their coverage positions. This alert provides a broad overview of the key coverage considerations for policyholders, organized by the major lines of insurance likely to be affected:
- Property and business interruption
- Political risk and political violence
- Commercial general liability policies
- Cyber risk
- Directors and officers liability
- Marine and cargo
- Aviation
- Event cancellation and contingency
- Employer’s liability and workers’ compensation
Property and business interruption coverage
As strikes continue to impact critical infrastructure and commercial centers across the Middle East, commercial property and business interruption policies are the first line of defense for companies facing losses from these events. However, policyholders should be aware that war and hostile acts exclusions – common in property policies – may limit or preclude coverage depending on policy language and how the conflict is characterized. For claims that survive exclusionary analysis, policyholders should understand several key coverage grants and limitations within these policies.
Physical property damage. Standard property policies typically cover direct physical loss or damage to covered property from covered perils. Where military strikes, collateral damage, or civil unrest cause physical damage to insured facilities, equipment, or inventory, policyholders may have viable claims. Many policies require physical damage to trigger business interruption coverage (see below), though the scope of what constitutes “physical damage” has been the subject of significant litigation and may vary by jurisdiction.
Business interruption. Business interruption coverage protects against lost income and continuing expenses when a covered peril interrupts normal business operations. For policyholders in affected regions, this can cover facility closures, reduced production, and lost revenue attributable to physical damage.
Contingent business interruption. Policyholders whose own facilities are undamaged, but who suffer losses due to damage at customer or supplier locations may have contingent business interruption coverage. This can be particularly valuable where supply chain disruptions arise from damage to ports, airports, transportation hubs, or key vendors.
Civil authority and denial of access. Many property policies include coverage for losses sustained when a civil authority prohibits access to insured premises. Where governments impose travel restrictions, airspace or airport closures, or evacuation orders that affect business operations, civil authority coverage may respond even without direct physical damage to the insured’s own property.
Key exclusions. War and hostile acts exclusions are common in property policies and may exclude losses arising from the conflict in the Middle East. However, the scope of these exclusions varies significantly by policy language and jurisdiction. Some policies exclude only losses from “declared war,” while others extend to undeclared hostilities or military action of any kind. Policyholders should scrutinize the specific exclusionary language and consider whether endorsements or write-backs restore coverage for particular scenarios.
Political risk and political violence coverage
Political risk and political violence policies offer an alternative source of recovery. These specialized policies are designed to respond to losses arising from armed conflict, geopolitical instability, and governmental actions. Companies with assets, operations, or contractual commitments in affected countries should carefully review their political risk and political violence portfolios for potential coverage.
Political violence coverage. Political violence policies typically cover losses from war, civil war, insurrection, rebellion, revolution, terrorism, sabotage, and related perils. Unlike standard property policies, which often exclude such events, political violence policies are underwritten to cover these risks.
Expropriation and confiscation. Political risk policies may provide coverage for losses resulting from government seizure, expropriation, nationalization, or confiscation of assets. Consider this coverage line if a government in the region takes action to seize or restrict the use of company assets.
Contract frustration. Certain political risk policies cover losses when political events frustrate the performance of commercial contracts. For example, where government action prevents the delivery of goods or performance of services. This coverage can be valuable for companies with significant contractual commitments tied to the region. Policyholders should also review their policies for force majeure provisions and any exclusions that may limit coverage in conflict scenarios.
Currency inconvertibility. Some political risk policies cover losses arising from the inability to convert local currency or repatriate funds due to government-imposed exchange controls.
Commercial general liability policies
With any conflict, the risk of personal injury or property damage increases. If, however, someone a policyholder interacts with (such as a guest or patron) becomes injured or suffers a property loss, commercial general liability (CGL) policies may be implicated by claims arising from the conflict, though coverage depends heavily on the nature of the claims and the specific policy language.
Third-party bodily injury and property damage. If third parties assert claims against a policyholder for bodily injury or property damage arising from the policyholder’s operations in affected regions, CGL policies may respond. For example, claims by visitors, customers, or bystanders injured at a policyholder’s facility during an attack could trigger liability coverage. Similarly, claims for property damage caused by a policyholder’s operations, such as damage from fire, explosion, or hazardous conditions, may be covered.
Key exclusions. CGL policies often contain war exclusions that may limit or preclude coverage for claims arising from armed conflict. The application of these exclusions will depend on the factual circumstances of each claim and the specific policy language. Proximate cause analysis may be critical. If a claim arises from a covered peril (such as premises liability for a slip and fall) but occurs during a conflict, coverage may still be available depending on how the causal chain is characterized.
Cyber risk coverage
The Middle East conflict heightens exposure to cyber risks, particularly given the history of state-sponsored cyber operations associated with geopolitical tensions. Companies should be mindful of past incidents involving sophisticated hacking campaigns attributed to nation-state actors. The current environment may give rise to similar or escalated cyber threats.
Network security and data breach. Cyber policies typically cover losses from unauthorized access to computer systems, malware attacks, ransomware, and data breaches. In a conflict environment, state-sponsored actors may target critical infrastructure, financial systems, and corporate networks.
Business interruption from cyber events. Many cyber policies include business interruption coverage triggered by a cyber event that disrupts operations. If a cyberattack causes system outages, production shutdowns, or an inability to process transactions, cyber business interruption coverage may respond.
Critical infrastructure and operational technology. Companies with operational technology systems, such as manufacturing controls, energy infrastructure, or transportation systems, face particular risk from cyber operations targeting industrial systems.
War and terrorism exclusions. Many cyber policies contain war exclusions or hostile act exclusions that may be invoked to deny coverage for state-sponsored cyberattacks. The application of these exclusions to cyber events has been hotly contested in recent litigation, with outcomes depending on specific policy language and the attribution of attacks to particular actors. Policyholders should review their cyber policies for war exclusion language and any carve-outs or limitations on those exclusions.
Directors and officers (D&O) liability coverage
Businesses operating in or relying on areas of conflict may be exposed to specialized claims relating to how directors, officers, and executives react and operate during the conflict. Conflicts may also give rise to exposure under D&O liability policies, particularly for publicly-traded companies.
Securities claims and stock price drops. If a company’s stock price declines materially due to losses, operational disruptions, or disclosed risks related to the conflict, shareholders may bring securities fraud claims alleging that management failed to adequately disclose material risks. D&O policies typically cover defense costs and, in many cases, settlements or judgments arising from such claims.
Shareholder derivative actions. Shareholders may also bring derivative suits against directors and officers alleging breach of fiduciary duty in connection with risk management decisions, failure to implement adequate safeguards, or decisions to continue operations in high-risk regions.
Disclosure obligations. Public companies have ongoing disclosure obligations regarding material risks and developments. Management should ensure that disclosures regarding conflict-related exposures are accurate, complete, and timely to minimize the risk of subsequent securities claims. Coordination between legal, finance, and risk management functions is essential.
Regulatory investigations. The conflict may also prompt regulatory inquiries into sanctions compliance, export controls, or other matters.
Marine and cargo coverage
The conflict is affecting critical shipping lanes, including the Strait of Hormuz and broader waterways in the Gulf, making marine and cargo insurance a significant coverage line for affected policyholders.
Hull and machinery coverage. Vessel owners and operators should review their hull and machinery policies for coverage of physical damage to ships. Standard marine policies may contain war risk exclusions. Separate war risk coverage is often purchased to fill this gap.
Cargo insurance. Cargo policies protect against loss or damage to goods in transit. Shippers and cargo owners should assess whether their policies cover losses arising from conflict-related perils, including seizure, detention, or destruction of cargo. War risk and strikes, riots, and civil commotion (SRCC) endorsements may provide broader coverage than standard cargo forms.
Increased costs and deviation. The conflict may force vessels to deviate from planned routes, incur additional fuel and operating costs, or experience significant delays. Certain marine policies may cover such increased costs.
Protection and indemnity (P&I) coverage. P&I clubs provide liability coverage for shipowners and operators, including coverage for third-party claims, crew injuries, and pollution liability. Members should consult with their P&I clubs regarding coverage for conflict-related liabilities.
Aviation insurance
Airlines, aircraft operators, leasing companies, and businesses with aviation assets face significant exposure from the conflict, including risks to aircraft, airspace restrictions, and operational disruptions.
Please read our separate client alert addressing aviation-specific insurance considerations in greater detail.
Event cancellation and contingency coverage
Companies with planned events, conferences, exhibitions, or other gatherings in or near affected regions should assess their event cancellation and contingency insurance coverage.
Cancellation, postponement, and relocation. Event cancellation policies typically cover non-recoverable costs and lost revenue when a covered peril forces the cancellation, postponement, or relocation of an insured event. Covered perils may include civil unrest, government-ordered cancellations, travel restrictions, and denial of access to venues.
Non-appearance coverage. Certain contingency policies cover losses arising from the non-appearance of key speakers, performers, or participants caused by travel restrictions or security concerns.
Force majeure. Policyholders should also review their event policies for force majeure provisions and any exclusions that may limit coverage in conflict scenarios.
Employer’s liability and workers’ compensation
Companies with employees stationed in or traveling through the affected regions face significant exposure for workplace injuries, evacuations, and potential liability for failure to implement or provide adequate safety measures. With unpredictable airstrikes and attacks threatening the safety of personnel across multiple countries, employers must act swiftly to protect their workforce, while also understanding the insurance implications of their decision.
Employee safety and employer’s liability. Policyholders with employees in affected regions face potential liability for workplace injuries or failure to provide adequate safety measures. Workers’ compensation and employer’s liability policies should be reviewed alongside CGL policies to understand the full scope of coverage for employee-related claims. Companies should thoroughly document all safety protocols, evacuation decisions, and protective measures taken on behalf of employees. This documentation may prove critical in defending against claims that the employer failed to take reasonable precautions in response to the conflict.
Immediate steps for policyholders
Regardless of which coverage lines are implicated, policyholders should take several immediate steps to protect their coverage rights:
- Gather and map all potentially responsive policies. Assemble complete copies of all policies that may respond to conflict-related losses, including all endorsements, manuscript forms, and declaration pages. This should include property, business interruption, political risk, political violence, general liability, cyber, D&O, marine, aviation, event cancellation, trade credit, and travel policies.
- Provide prompt notice to insurers. Provide prompt written notice to all potentially responsive insurers, even where loss amounts have not yet been quantified or coverage is uncertain. Where facts are still developing, frame notices as subject to supplementation. Adhering to notice provisions preserves optionality and mitigates the risk of later notice-based coverage defenses.
- Document losses and mitigation efforts. Carefully document all losses, cancellations, business trends, and financial data. Designate a team or cost center to track potential losses as they develop. Thoroughly document all mitigation efforts, including safety measures, evacuation decisions, and operational changes.
- Monitor carrier correspondence. Certain policies may permit insurers to issue notices of cancellation or modification of coverage for affected territories. Policyholders should confirm that premiums are current and continuously monitor incoming insurer correspondence closely and review any such notices promptly upon receipt. These notices often impose strict deadlines for action. Failure to respond appropriately may result in a lapse of critical coverage.
- Engage brokers and insurance coverage counsel. Given the complexity of coverage issues arising from geopolitical events, policyholders should engage their insurance brokers and insurance coverage counsel to discuss coverage questions, confirm policy terms, and develop a coordinated claims strategy.
Future insurance coverage outcomes are heavily dependent on strategic claims handling today. We strongly encourage all affected clients to act swiftly to assess their exposure, engage with insurers and brokers, and take all reasonable steps to mitigate potential losses.
The Reed Smith Insurance Recovery Group is available to lend policyholders our expertise in policy review, notice preparation, and strategic guidance as the situation in the Middle East continues to unfold. Please do not hesitate to contact us if you have questions or require assistance.
This alert is based in part on publicly available information as of March 13, 2026, and conditions may change rapidly.
Client Alert 2026-59