The War Exclusion to the CGL Policy

Standard comprehensive general liability (CGL) policies insure businesses against liability for personal injury or property damage of third parties. The policies contain a number of exclusions from coverage. Insurance needs and risk planning regarding the eventualities described in the exclusions should take into account that standard CGL policies, though comprehensive, do not cover excluded events. One exclusion relates to injuries or damage caused by war:

"Bodily injury" or "property damage" due to war, whether or not declared, or any act or condition incident to war. War includes civil war, insurrection, rebellion or revolution. This exclusion applies only to liability assumed under a contract or agreement.

Words in the exclusion have been defined by the courts in cases considering application of the exclusion or application of coverage in policies issued to cover war-related risks. "War" has been defined to refer to hostilities among sovereign entities or among entities with significant attributes of sovereignty. Thus, the war-risk exclusion did not exclude coverage for damage to a hotel or to an airplane caused by terrorists because the terrorist groups lacked attributes of sovereignty.

Regarding other terms in the exclusion, a court in denying exclusion of coverage for the loss of an airplane destroyed on the ground by hijackers observed that "'rebellion,' 'revolution,' and 'civil war' are progressive stages in the development of civil unrest, the most rudimentary form of which is 'insurrection.'"

Ambiguities in the exclusion will be interpreted in favor of the insured and in favor of providing coverage. Thus, even if a government refers to a "war" on terrorism or journalists refer to a "civil war," the question of whether the exclusion applies to damage resulting from hostilities will depend on the definition for insurance purposes of the terms in the exclusion rather than on characterization of the events leading to the damage. The court will give the words their "insurance meaning" with an eye toward providing coverage if doing so would be reasonable.

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