Maritime Insurance Considerations for Strait of Hormuz Transit

Published: 1 May 2025 · Last updated: 31 October 2026

The Strait of Hormuz sits within a region that the international insurance market designates as a heightened-risk area for commercial vessels. Shipowners and operators transiting the corridor should review their hull and machinery cover, war risk insurance, and P&I arrangements before each voyage. This overview summarises the main insurance considerations without constituting insurance advice.

Hull and Machinery cover in a war risk zone

Standard marine Hull and Machinery (H&M) policies cover physical damage to the vessel arising from insured perils — typically including collision, grounding, weather, and fire — but generally exclude losses arising from war, mines, terrorism, and piracy. These exclusions are governed by the Institute War and Strikes Clauses (Hulls) published by the Lloyd's Market Association.

Operators whose H&M cover contains a war exclusion must purchase separate war risk insurance to maintain full physical damage protection when transiting the Strait of Hormuz. War risk cover for the Gulf region typically covers loss or damage caused by hostile detonation of explosive weapons, seizure, and terrorist acts.

War Risk insurance and the Joint War Committee

The Joint War Committee (JWC), comprising Lloyd's and London company market underwriters, maintains a list of areas requiring an additional premium for hull war risk cover. The Persian Gulf and Gulf of Oman have featured on JWC-listed or notifiable areas during periods of elevated tension.

When a vessel enters a JWC-listed area, the shipowner is typically required to give seven days' notice to their war risk underwriters (reduced notice is possible in many policies). Failure to give notice, or transiting without war risk cover in force, can leave the owner exposed to an uninsured total loss in a worst-case scenario.

War risk premiums for Gulf transits are calculated as a percentage of the vessel's insured value per voyage. Rates fluctuate significantly with geopolitical conditions and can increase sharply during periods of incident activity.

P&I cover and its Gulf implications

Protection and Indemnity (P&I) insurance covers third-party liabilities that fall outside H&M cover: pollution, crew injury and repatriation, collision liability (the running-down clause), cargo claims, and wreck removal. P&I cover is provided by mutual clubs and is essential for vessels calling at commercial ports.

Most P&I clubs include a war liability exclusion similar to the hull war exclusion. Separate P&I war liability cover can be purchased from the war risks market. In the event of an incident involving a hostile act in the Strait of Hormuz — for example, a drone strike causing a pollution event — operators without P&I war cover may face uninsured third-party liability claims that can run into hundreds of millions of dollars.

Additional premiums for Hormuz transits

Shipowners should budget for additional war risk premiums as a voyage cost for Hormuz transits. During elevated tension periods, these additional premiums can amount to a meaningful fraction of the voyage freight. Charterers typically negotiate who bears the additional premium cost in the charterparty; it is common to pass this cost to the charterer or cargo owner as an additional war risk surcharge.

UKMTO reporting and its link to insurance

The United Kingdom Maritime Trade Operations (UKMTO) organisation, based in Dubai, provides a voluntary vessel reporting service for vessels transiting the Gulf of Oman, the Arabian Sea, and the North Arabian Sea. UKMTO issues maritime security communications and coordinates with naval forces in the region.

While UKMTO registration is voluntary, many P&I clubs and war risk underwriters require or strongly recommend that vessels register with UKMTO before transiting the Strait. Registration also facilitates a faster response if a vessel calls for assistance.

Loss prevention measures

Insurance underwriters may apply reduced premiums or extended cover to vessels that demonstrate proactive loss prevention measures, including:

• Adherence to Best Management Practices (BMP6), the industry guide for maritime security in high-risk areas
• UKMTO registration before and during transit
• Maintaining a citadel or hardened safe muster point for crew
• Posting additional bridge watches during the transit corridor
• Maintaining AIS in operating mode throughout transit
• Checking the vessel's master and crew are properly drilled in security procedures

How the insurance market has responded to recent Gulf incidents

The Gulf insurance market has hardened significantly since a series of vessel seizures, drone attacks, and mine incidents in the region from 2019 onwards. Underwriters have tightened exclusion language, introduced specific geographic sub-limits, and added new warranties requiring owners to provide voyage notifications. Claims arising from political violence have in several cases given rise to complex disputes over the boundary between H&M perils and war perils.

Operators purchasing new or renewing war risk cover are advised to read the policy wording carefully, particularly the definitions of “war” and “terrorism” and the geographic coverage area.

Key steps before transit

1. Confirm with your H&M underwriters that war risk cover is in force for the Gulf region
2. Give the required notice to war risk underwriters before entering a JWC-listed or notifiable area
3. Confirm with your P&I club that cover is not excluded for the voyage
4. Budget for additional war risk premiums as a voyage cost
5. Register with UKMTO before transit
6. Apply BMP6 precautions throughout the corridor