What is the '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.

BREAKING DOWN 'War Damage Insurance Corporation'

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.

War Damage Insurance Today

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.

RELATED TERMS
  1. War Exclusion Clause

    A war exclusion clause in an insurance policy excludes coverage ...
  2. War Bond

    A war bond is a debt security issued by a government for the ...
  3. Prior Acts Coverage

    A feature of an insurance policy that extends current coverage ...
  4. War Economy

    War economy is the organization of a country's production capacity ...
  5. Liability Insurance

    Any type of insurance policy that protects an individual or business ...
  6. Coordination Of Coverage

    A review or modification of an individual's or business’ insurance ...
Related Articles
  1. Investing

    Government Debt: From Billions To Trillions

    The national debt has been growing in leaps and bounds. Find out why.
  2. Insurance

    The Importance Of Property Insurance

    Property insurance is important, but there's a lot you need to learn in order to get the proper coverage.
  3. Insurance

    What To Do If Your Insurance Won't Pay

    Before paying for coverage, find out what you need to do to ensure you get paid.
  4. Trading

    How global events affect the forex market

    Learn how politics, war and natural disasters move currency prices in the forex market, and how you should respond.
  5. Investing

    4 Commodities Affected By World Conflicts

    What happens to commodities when political disagreements lead to war?
  6. Insurance

    Millennials Guide: Picking the Right Car Insurance

    Millennials fall into the category of high car-insurance rates. Check out some of the ways to save money, like owning an older car or leasing a vehicle.
  7. Personal Finance

    Economic Effects Of Life After Military Service

    The end of operations in Iraq and Afghanistan will have an impact on the economy. Discover how.
  8. Insurance

    5 Types Of Insurance You Can (And Should) Afford

    With insurance and warranties being offered on seemingly everything, it's hard to know what policies are worth your money. Learn about five affordable insurance policies that are worth considering.
  9. Investing

    What Is A Currency War And How Does It Work?

    We look at what a currency war is, what factors may lead to it, the impacts of such a strategy, and whether there is a currency war currently.
  10. Insurance

    6 Types Of Insurance Coverage You Didn't Think You Needed

    These different types of insurance coverage can be beneficial, but they're often overlooked and misunderstood.
RELATED FAQS
  1. What Does 'Buy on Cannons, Sell on Trumpets' Mean?

    The saying suggests that the start of a war is a good time to invest in the stock market. Read Answer >>
  2. Suppose my garage collapsed on my car. Are damages covered by my home insurance or ...

    Generally, damage to an automobile will be covered by comprehensive car insurance, which is in addition to collision coverage. Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center