Russian insurance companies have begun offering optional coverage for war-related property damage, pushing up the total cost of standard property policies by as much as 12%, business newspaper Kommersant reported Friday.
The new add-ons allow homeowners to buy protection against property damage caused by falling drone debris, missile explosions or malfunctioning Russian air defense systems. Policy terms from major insurers AlfaStrakhovanie and Ingosstrakh now explicitly list "military actions, maneuvers, exercises or military operations of any kind" as covered perils, including "missiles, artillery shells, landmines, bombs and other munitions, alongside the deployment of air defence systems and the impact of blast waves." Ingosstrakh has gone further still, extending its scope to include civil war, civil unrest and labour strikes.
Other major insurers, including Reso-Garantia, Rosgosstrakh and Soglasie, have capped maximum payouts at between 30 million and 50 million roubles (approximately £270,000 to £455,000), according to the report.
Despite the broadening of cover, industry insiders are warning of significant ambiguity. Some insurers do not clearly differentiate between war risks and acts of terrorism, a distinction that carries serious practical consequences. Experts caution that a grey area could emerge if authorities officially classify a strike as terrorism rather than a military act. Legal experts have further warned that policyholders may find it "practically impossible" to collect on these claims, with disputes expected over strict policy exclusions, indirect losses and the heavy burden of proof required to establish the precise cause of damage.
In 2025, Russia's Supreme Court ruled that because a state of war has not officially been declared, Article 964 of the Civil Code on force majeure does not automatically apply, meaning insurers have been obliged to pay out for drone and shelling damage. The ruling protected policyholders legally, but in economic terms it severely damaged the market segment.
The Russian property insurance market for acts of terrorism and sabotage was estimated at between 25 billion and 40 billion roubles in 2025, with losses in that segment exceeding 100%. Property insurance payments increased by approximately 30% in 2025, according to Russia's central bank, reaching 164 billion roubles.
Russia officially refers to its invasion of Ukraine as a "special military operation."
The classification problem at the heart of Russia's domestic insurance crisis is one the London market knows well. The Lloyd's Market Association's Political Violence and Terrorism Claims Group actively monitors geopolitical situations across multiple jurisdictions, including the Ukraine-Russia conflict, and provides a dedicated forum for claims expertise across the Lloyd's market.
The LMA has also produced an updated model sabotage and terrorism wording, LMA3030B, with a revised cyber exclusion and updated sanctions clause, reflecting how market language has had to evolve in response to the changing risk landscape.
The tension between all-risks and war-risk cover has already generated the biggest insurance litigation in London's recent history.
In June 2025, the High Court awarded AerCap just over $1 billion under war-risk coverage for aircraft stranded in Russia following the invasion of Ukraine, rather than the full amount sought under all-risks provisions. Insurers Chubb, Fidelis and Lloyd's were subsequently granted permission to appeal the ruling. The original dispute involved claims from multiple lessors, including AerCap, Dubai Aerospace Enterprise and Merx Aviation, against insurers including AIG, AXA, Allianz, Chubb, Fidelis, Swiss Re and Lloyd's Insurance Company, with the total claim originally valued at up to $4.7 billion, the report said.
In developed jurisdictions, risks from war and terrorism are typically insured not by the private market alone, but with state support.
The United Kingdom has operated Pool Re, a government-backed reinsurer, since 1993, on the basis that no private company can absorb military losses alone. Pool Re recently completed a £2.75 billion retrocession placement with more than 60 international reinsurers, covering conventional attacks, CBRN events and a cyber extension, designed to shift more risk away from the UK taxpayer and back to the private market.
Russia is discovering the hard way what the UK resolved three decades ago: without a state backstop, private insurers writing war-adjacent risks will either price themselves out of the market, cap their exposure severely, or face losses that threaten the viability of the product entirely.
