MARAD War Risk Insurance — Federal Maritime War Risk Coverage

When commercial insurance markets refuse to cover ships operating in war zones or areas of extreme military risk — as they routinely do when armed conflict erupts — the U.S. federal government steps in. The Maritime Administration (MARAD) operates a war risk insurance program that provides hull, cargo, seamen's, and builder's risk coverage to U.S.-flag vessels (and certain foreign vessels serving U.S. interests) when the private market fails. Governed by 46 CFR Part 308, the program is a national defense backstop — keeping essential maritime commerce moving during conflicts when private insurers would otherwise pull coverage entirely, leaving shipowners unable to operate without incurring catastrophic uninsured risk.

Current Rule (2026)

What This Rule Does

Commercial marine insurance generally excludes war risk — hostile action, mines, torpedoes, capture, seizure, and similar war-related perils — from standard hull and cargo coverage. War risk is instead written as a separate policy through specialized markets (historically Lloyd's of London and similar syndicates). When armed conflict escalates, those markets typically cancel or restrict war risk coverage for affected trade routes within 48 hours, leaving shipowners exposed.

46 CFR Part 308 establishes the regulatory framework under which MARAD provides government-backed war risk insurance as a substitute when private market coverage becomes unavailable or unaffordable. The program covers five distinct risks:

1. War Risk Hull and Disbursements Insurance (Subpart B): insures the vessel itself against physical loss or damage from war perils; the insured amount is based on the vessel's agreed value as determined by the Maritime Administrator, capped at the requisition value (what the government would pay to take the vessel); disbursements coverage covers operating expenses lost due to vessel casualty

2. War Risk Protection and Indemnity (P&I) Insurance (Subpart C): covers the shipowner's third-party liability arising from war perils — damage to other vessels, port facilities, or cargo caused by a war-related incident aboard the insured vessel; mirrors the liability coverage that commercial P&I clubs (mutual insurance associations) normally provide

3. Second Seamen's War Risk Insurance (Subpart D): provides life and disability coverage for crew members killed or injured by war perils; described as "second" because it supplements (rather than replaces) whatever commercial seamen's war risk coverage the operator already has in place

4. War Risk Builder's Risk Insurance (Subpart E): covers vessels under construction at a U.S. shipyard against war perils during the construction period — important when a foreign attack or domestic sabotage could destroy a ship still on the ways before it is delivered to the owner

5. War Risk Cargo Insurance (Subpart F — the largest subpart, 52 sections): insures cargo moving on insured vessels against loss or damage from war perils during transit; available to U.S. exporters, importers, and cargo interests shipping on American-flag vessels

Key Provisions

• § 308.1 — Eligibility for vessel insurance: any vessel documented under U.S. law is eligible; also eligible are undocumented vessels owned or chartered by the U.S. government, U.S. citizen-owned tugs and barges used in essential water transportation, and U.S. citizen-owned fishing vessels; foreign-flag vessels determined by the Maritime Administrator to be serving U.S. national interests may also be covered
• § 308.100 — Hull insured amount: the applicant states the desired insurance amount; the actual payment on a total loss claim is the agreed value as determined by MARAD, which may not exceed the government's requisition value; partial loss claims are paid based on actual repair costs
• § 308.102 — Binder fees (how application works): upon accepting an application, MARAD issues an interim binder for the period before the full policy attaches; binder fees: $25 for U.S. vessels under 500 gross tons; $100 for U.S. vessels 500 gross tons and over; $50 for foreign-flag vessels under 500 gross tons; $200 for foreign-flag vessels 500 tons and over; fees are non-refundable
• § 308.104 — Additional private war risk insurance: owners and charterers may obtain additional war risk coverage from private markets on an excess basis above the MARAD-insured amount; any such excess insurance does not inure to MARAD's benefit as primary underwriter
• § 308.105 — Reporting casualties and filing claims: the insured vessel master or owner must report any war risk casualty to MARAD immediately; claims must be filed within specified periods (hull claims within 180 days of loss); supporting documentation requirements vary by coverage type
• §§ 308.200–308.260 — Protection and Indemnity coverage: covers the shipowner's war-risk third-party liability including personal injury and death of crew, collision liability, and property damage caused by war perils; policy terms mirror standard P&I coverage with war perils added
• §§ 308.300–308.340 — Second Seamen's War Risk: provides death and permanent total disability benefits to crew members; available only when the vessel also carries hull war risk insurance; benefit amounts are prescribed by the regulations
• §§ 308.500–308.800 — Cargo insurance (Subpart F): the most operationally active subpart; covers cargo on U.S. vessels against war perils from loading through delivery; cargo interests can apply for open cargo policies covering all shipments on U.S.-flag vessels during the policy period; premium rates are set by MARAD and are intended to be competitive with private market rates during normal times

How It Affects You

The war risk insurance program is largely invisible in peacetime — private insurance markets function normally and MARAD coverage is unnecessary. The program becomes critically important in two scenarios: when U.S. forces are engaged in or near a conflict zone affecting shipping lanes, and in the early days of a new conflict when private insurers are pulling coverage before the government program is activated.

If you own or operate a U.S.-flag vessel and your vessel trades on routes that could be affected by armed conflict, contact MARAD's Office of Cargo and Commercial Sealift to understand the activation status of the war risk program and application requirements. Maintaining a current binder application on file speeds the process when coverage is needed urgently — war risk can cancel from commercial markets with 48 hours' notice.

If you are a cargo shipper using U.S.-flag vessels to trade in or near conflict zones, the cargo war risk program (Subpart F) can cover your cargo interests separately from the vessel owner's hull coverage. Cargo war risk is especially relevant for agricultural commodity exports (USDA-preference cargo frequently moves on U.S.-flag vessels under cargo preference laws), defense cargo, and humanitarian relief shipments.

Historical context: The war risk insurance program traces to World War I and was substantially expanded for World War II, when MARAD's predecessor insured hundreds of Liberty ships and other war-built vessels. The program was activated during the Persian Gulf tanker war (1987–1988) when Iranian and Iraqi attacks on shipping in the Gulf disrupted commercial insurance. More recently, the program has been relevant to U.S.-flag vessels operating in Middle Eastern waters and in relation to shipping affected by the Russia-Ukraine conflict.

Statutory Authority

This rule implements:

• 46 U.S.C. Chapter 539 (War Risk Insurance) — authorizes the Maritime Administrator to provide war risk insurance for vessels and cargo when the commercial market is unavailable; sets the basic coverage types, eligibility, and government risk-bearing authority
• 46 U.S.C. § 53902 — Specific authority to insure against war risk for vessels documented under U.S. law and for cargo on those vessels

Recent Rulemakings

No major amendments to 46 CFR Part 308 have been published in the Federal Register in recent years. The regulatory framework has been stable since its foundational establishment. MARAD periodically updates the policy forms incorporated by reference in the subparts through administrative action rather than formal rulemaking.

Recent Developments

• Red Sea and Houthi attacks (2024): Houthi attacks on commercial shipping in the Red Sea beginning in late 2023 triggered a significant increase in commercial war risk insurance premiums for vessels transiting the Bab-el-Mandeb strait and Red Sea. U.S.-flagged vessels and vessels carrying cargo for U.S. military and government accounts sought MARAD war risk coverage as private market premiums spiked and some private insurers added exclusion endorsements for Red Sea transits. MARAD activated its advisory role and assessed whether to extend war risk coverage to affected routes.
• Ukraine conflict and Black Sea shipping: Russia's full-scale invasion of Ukraine in 2022 effectively closed the Black Sea to most commercial shipping for Ukrainian and international vessels. MARAD war risk insurance was relevant for U.S.-flag vessels that had been operating in Ukrainian ports. The conflict also demonstrated the program's relevance for modern hybrid warfare scenarios where ships face missile, drone, and mine threats rather than conventional naval combat.
• MARAD war risk as market backstop: Commercial marine war risk insurance markets (primarily Lloyd's of London) have historically led pricing and coverage determinations, with MARAD's program serving as a backup when private markets withdraw. The program's continued relevance depends on maintaining the administrative capacity to underwrite war risk policies quickly when private markets contract — a capability that requires periodic program maintenance even during low-claim periods.
• MANPADS and drone threats to maritime shipping: The evolution of threats to commercial shipping — from traditional naval mines and naval gunfire to shoulder-fired missiles, remotely operated drones, and cyberattacks on navigation systems — has required MARAD to assess how its policy forms and coverage terms apply to new attack modalities. Coverage interpretations for drone strikes on vessels and cyberattacks causing physical damage are areas of ongoing legal analysis.

Pending Action

No major rulemaking of Part 308 is currently pending. MARAD's war risk insurance program requires periodic administrative review of policy forms, premium rate structures, and coverage terms to ensure the program remains viable and responsive to current threat environments. MARAD industry advisory groups have raised the drone and cyberattack coverage interpretation issues; formal guidance or policy form updates may follow. U.S.-flag vessel operators in high-risk areas (Red Sea, Eastern Mediterranean, Persian Gulf approaches) should review their commercial war risk coverage terms and consult with MARAD's Office of Marine Finance and Insurance about federal coverage availability before entering high-risk routes. Congressional oversight of MARAD's war risk program capacity may increase given the Red Sea shipping disruptions and the program's relevance to U.S. military sealift planning.