War Damage Insurance Corporation

The War Damage Insurance Corporation was a government financial protection arm created during World War II to provide coverage for war risks not covered by existing policies. The U.S. government provivded this coverage, to compensate American nationals for property damage caused by acts of war.

The creation of this corporation allowed the U.S. government to cover private property war losses, which private insurance didn't fully cover. The War Damage Insurance Corporation functioned like a private insurance company in that citizens had to purchase a policy with the company to be covered in the event of catastrophic loss related to the war.

The War Damage Insurance Act established the War Damage Insurance Corporation in 1941. Previous to World War II, the U.S. government did not consider individuals automatically entitled to compensation for war-related damage to their private property. According to a message penned by President Ulysses S. Grant upon vetoing compensation for owners of property in the south that had been burned during the American Civil War, the government viewed damages to private property through war as a, "matter of bounty rather than of strict legal right."

However, after World War I, many policymakers in the U.S. and Europe believed that modern warfare necessitated a way to compensate civilians for private property damage due to factors beyond the individual’s control. War damage insurance issued by the U.K. inspired the U.S. to found its own government-sponsored war damage insurance company.

Private insurers often offer limited or no coverage for acts of war because they cannot realistically afford to cover a tremendous number of catastrophic losses in such a short period of time. Policies insuring private property usually contain a war exclusion clause, which explicitly exempts the insurer from having to cover damage caused by war. Insurers expanded these clauses after the terrorist attacks of September 11, 2001.

However, some private insurance companies do provide policies specific to war damage. Some policies insure against damage in the case of attack by weapons of mass destruction (WMDs), insurrection or a hijacking incident.

Other forms of insurance also help individuals from incurring some costs due to terrorism or war, at least in some cases. For example, travel insurance typically covers the flight and hotel of a person who needs to cancel travel booked to a destination that is suddenly under terrorist attack or caught in a civil war.