A Californian court of appeals found that war exclusions which exclude coverage for expenses resulting from “war” or “warlike action by a military force” require hostilities between de jure or de facto governments (governments or entities essentially like governments).
The insured was a film company producing a television series in Jerusalem when Hamas fired rockets from Gaza into Israel in July 2014. The insured moved their production out of Jerusalem and claimed the significant expenses incurred in doing so. The court found on the facts that Hamas is neither a de jure nor a de facto sovereign, it was not engaging in war or warlike activities. The special meaning of these phrases in insurance law requires operations of the kind that belligerents have recourse to in war where operations are carried out by the military forces of a sovereign or quasi-sovereign government. Hamas was neither. War and warlike operations do not usually include intentional violence against civilians by political groups. In addition, because the policy did not contain a terrorism exclusion, the insured had a reasonable expectation that acts of terrorism would be covered. The matter was referred back to the lower court to decide whether the “insurrection, rebellion or revolution” exclusion applied.
The court referred to the well-known cases of Pan Am v Aetna (relating to the hijacking of an aircraft by the PLA in 1970) and Holiday Inns v Aetna (relating to the damage to their hotel in Beirut in the 1975/6 Lebanese civil war)