The other day, I was reviewing the terms and conditions of an insurance proposal and noticed that the policy would include a war exclusion. This is a common exclusion and the vast majority of insurance policies have some form of war exclusion. While this is not the only reason, or necessarily the best one for the U.S. to remain the world’s military superpower, it is a very practical one.
The insurance industry resource, IRMI online, explains the war exclusion as follows:
“A provision found in nearly all insurance policies that excludes loss arising out of war or warlike actions. The loss can result from either declared or undeclared war but must be related to actions of a military force directed by a sovereign power.” (emphasis added)
Prior to 9/11, the war exclusion was not as broad. But that tragic event brought about sweeping changes in the airline industry (think TSA), personal privacy (think NSA), and changes in the insurance industry in the form of a broader war exclusion. For most policies today, the net effect is that losses arising from or related to an act of terrorism, which is typically an undeclared act of war, are not covered. Sometimes the insurance company will strike or modify the exclusion, but if it’s an option, it may be a very pricey one.
Now, don’t me wrong, I’m not criticizing the insurance industry. It makes sense for insurance policies to contain exclusions. Otherwise, policies that covered “everything” would be cost prohibitive, if available at all. The investment resource, Investopedia, explains the rationale for the war exclusion this way:
“Because most insurance companies would be unable to remain solvent, let alone profitable, if an act of war suddenly presented them with thousands or millions of expensive claims, auto, homeowners, renters, commercial property and life insurance policies often have war exclusion clauses.”
How would the triggering or the war exclusion impact you? If you have health insurance, long-term care insurance, life insurance, homeowners insurance, or other forms of personal insurance, and if your policy has such an exclusion, and most do, then you would be out of luck should evil come calling in your neighborhood. If you own rental property, same situation. And if you own a business, good luck getting a claim paid if the company believes the loss was due to an act of war, declared or otherwise.
Some speculate that state and federal governments would help out with low-cost loans and such just as they do for other catastrophic events, such as when a hurricane or tornado strikes. This is quite possible, especially if the damage is localized. However, in the event of massive and widespread injuries and property damage, and with the federal government currently owing more than $17 trillion, and many state governments debt ridden as well, is this really what you want to count on? Furthermore, do you really think it’s a good idea for us to show weakness to our enemies by not treating our national defense the way it should be, as the top national priority?
In light of the war exclusion on our insurance policies, it makes good sense and is in your personal best interest, as well as our national best interest, to keep this gaping hole in your financial plan in mind. This is especially important to do if you are ever inclined to elect a pacifist to Congress, or are inclined to cast your vote for a presidential candidate who may represent “progress” to you, but is otherwise unqualified to serve as Commander-in-Chief of the armed forces of the United States of America.
In other words, we need more than pie-eyed optimism when dealing with the likes of China, Iran, North Korea, and Russia. After all, unless I’m gravely mistaken, the U.S. State Department and the CIA, among other governmental agencies, do not consider any of them our allies, and they probably won’t be anytime soon. Oh sure, we’re encouraged to do business with them, but as I said before, do you want part of your legacy the fact that you cozied up to communists?
Our first president, George Washington, realized that he needed to convince his fellow colonists that it was in their best interests to boot the Brits out of our lives, or else the War for Independence was doomed. He and other Founders wisely understood that we humans are sometimes slow to connect the dots —unless they lead to our pocketbook. Most past presidents and Congresses seem to have understood this part of human nature, and also knew how important our national defense is to our security, and that of the free world . I’m not sure that our current president or Congress do, at least to the same degree; and yet, as a nation, we find ourselves in an increasingly hostile environment.
It is essential to our personal and national security that we elect a president and Congress who are committed to keeping the right focus and resources focused on our national defense and sovereignty. Of course, we have other national top priorities in addition to our national defense, but none as important.
Whether or not you uphold this principle out of self-interest, or a keen sense of self-defense, it is in your best interest to do so. In light of world history, and the current volatile global situation, only permanent residents of the State of Denial should have difficulty with this concept. Regardless, God forbid, should history repeat herself, none of us should count on our insurance companies to help make us whole.