Transport Insurance in the UAE Amid Geopolitical Conflict:

The United Arab Emirates occupies a strategically significant position within the global transport network, serving as a critical hub for international aviation and maritime trade. Its infrastructure facilitates substantial passenger and cargo flows across Europe, Asia, and Africa, while its ports play a central role in global shipping and energy supply chains, particularly for vessels transiting the Strait of Hormuz. However, this geographic centrality also exposes the UAE’s transport sector to the effects of geopolitical instability in the Gulf region. 
 

Recent developments, including heightened regional tensions, missile and drone threats, and disruptions to airspace and shipping routes, have introduced material operational risks. Beyond these immediate disruptions, such developments highlight a fundamental feature of transport insurance: the exclusion of war-related risks from standard coverage, creating a gap between operational exposure and insurable protection. 
 

Transport insurance in the UAE operates within a dual framework. Marine insurance is governed by Federal Decree-Law No. 43 of 2023 Concerning the Maritime Law (the “Maritime Code”), particularly Articles 278–309, which regulate insurance relating to vessels, cargo, and maritime liabilities. 
 

Aviation insurance, by contrast, is not governed by a specific domestic statute but is based on internationally recognised market practices. The AVN 48B War, Hijacking and Other Perils Exclusion Clause is widely incorporated into aviation insurance policies and serves as the primary mechanism for excluding conflict-related risks. The UAE therefore adopts a hybrid model combining statutory regulation for maritime insurance and contractual standardisation for aviation insurance. 

 

War-related risks are excluded from transport insurance as a matter of default. Article 288(1) of the Maritime Code provides that insurers are not liable for losses arising from war, hostilities, civil disturbances, terrorism, piracy, and similar events unless expressly agreed otherwise. 
 

A corresponding exclusion applies in aviation insurance through the AVN 48B clause, which excludes coverage for war, civil war, hijacking, sabotage, confiscation, and hostile detonation of weapons. These exclusions reflect the systemic and catastrophic nature of conflict-related risks, which may result in large-scale, correlated losses beyond the capacity of conventional insurance markets. Consequently, incidents such as missile strikes, drone attacks, or seizure of vessels or aircraft typically fall outside standard coverage. 

 

Despite these exclusions, war-related risks may be contractually reinstated. Article 289 of the Maritime Code permits parties to extend coverage to include losses arising from hostilities, retaliation, capture, detention, and related acts, regardless of whether war has been formally declared. 
 

In practice, such reinstatement is effected through “write-back” mechanisms. In maritime insurance, this is typically achieved through hull war-risk policies, while in aviation it is addressed through aircraft hull war-risk insurance supplementing AVN 48B exclusions. These policies, however, are subject to strict conditions, including short-notice cancellation provisions and additional premiums for operations within designated high-risk zones. 

 

Marine insurance contracts impose stringent obligations on insured parties. Under Article 293 of the Maritime Code, the insured must disclose all material information at the time of contracting, notify the insurer of any increase in risk, and take reasonable measures to preserve the insured property. 
 

These obligations are particularly relevant in conflict scenarios, where operational changes such as rerouting through high-risk areas may constitute a material increase in risk. Article 298 provides that misrepresentation or non-disclosure may invalidate the policy. In addition, Article 290 establishes that loss is presumed to arise from insured marine risks unless the insurer proves the applicability of an exclusion, while claims must generally be submitted within one year. 

Although aviation insurance is governed contractually, similar principles apply through policy terms and conditions. 

 

A key limitation of transport insurance lies in its treatment of economic loss. While policies cover physical damage to assets such as vessels, aircraft, and cargo, they generally do not extend to consequential financial losses arising from disruption. 
 

Accordingly, losses associated with delays, rerouting, increased costs, and supply chain interruptions are typically uninsured. In such circumstances, parties may rely on provisions of the UAE Civil Code. Article 273(1) allows termination of obligations in cases of force majeure, Article 249 permits judicial adjustment where performance becomes excessively burdensome, and Article 287 provides for exemption from liability where damage arises from external causes beyond a party’s control. These remedies, however, operate independently of insurance coverage and do not override war exclusions. 

 

The practical implications of these legal principles are evident across the UAE’s transport sectors. Maritime operators navigating sensitive routes such as the Strait of Hormuz face increased war-risk premiums and heightened underwriting scrutiny. Similarly, airlines operating through volatile airspace may encounter increased insurance costs or restricted coverage, potentially affecting the commercial viability of certain routes. 
 

From an insurance perspective, risk allocation is increasingly influenced by international reinsurance markets. As geopolitical tensions intensify, reinsurers may adjust pricing and capacity, directly impacting the availability and cost of coverage within the UAE. This has led to increased reliance on specialised insurance products, including war-risk and political violence coverage. 

 

The UAE’s transport insurance framework reflects a structured yet inherently limited approach to risk allocation. War-related risks remain excluded from standard coverage under Article 288 of the Maritime Code and the AVN 48B clause in aviation insurance, unless expressly reinstated through specialised arrangements. 
 

While such mechanisms provide targeted protection, they do not address the broader economic consequences of geopolitical instability. Transport operators must therefore rely on a combination of insurance, contractual safeguards, and operational strategies to manage exposure. In an increasingly volatile regional environment, the effectiveness of this approach will remain central to the resilience of the UAE’s transport sector. 

Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.rian and religious purpose in accordance with the law.