P&I clubs exclude war risk from standard mutual cover as a listed peril. In the clearest cases – a vessel struck by a missile in an active war zone – the exclusion applies, and owners must look to their separate war risk tower for cover. Ogullukian acknowledged, however, that certain downstream liabilities are harder to draw clean lines around. Where the proximate cause of a loss is a war peril, the consequences – oil escaping into international waters, for instance – may still potentially create environmental liabilities that clubs cannot simply disclaim. “Most war risk policies have a limit equal to a vessel’s value, and this may not be adequate for some of the larger third-party liability claims that P&I clubs are accustomed to seeing. P&I clubs fill this gap by offering a layer of coverage above a vessel’s insured value. Therefore, large maritime casualties where you may have environmental damage, wreck removal, etc., may still find their way back to a P&I club and their reinsurers,” he said.
