Running a business involves managing a range of risks, particularly during periods of geopolitical and economic uncertainty. In the early months of 2026, several developments have influenced the risk environment. These include an escalating war in the Middle East, rising gas prices, and increased concern over cyberattacks. Political risk insurance recently drew attention when the U.S. government ordered coverage for shipping lines operating through the Gulf of Hormuz. While this action highlighted a specific use case, the coverage itself applies to a broader set of business scenarios.
What Is Political Risk Insurance?
According to the National Association of Insurance Commissioners, political risk insurance protects businesses from risks tied to foreign government actions. These risks include restrictions on the import or export of goods, political violence, physical damage to overseas assets, and limitations on currency conversion.
Thaddeus Woosley, executive vice president and head of national practice groups at World Insurance Associates, explains that the coverage is particularly relevant for businesses operating internationally. He notes that it can help ensure companies can repatriate funds, maintain contract certainty, protect overseas assets, and retain recourse in the event of disruptions.
Although multinational corporations often use political risk insurance, exposure is not limited to them. Supply chains play a significant role in determining risk. Companies that source materials or components from foreign operations may face indirect impacts if those regions experience disruption. Similarly, businesses that supply products to international markets may be affected by downstream interruptions.
As a result, even smaller firms can be affected by global events through interconnected supply chains.
Structuring Political Risk Coverage
Businesses typically purchase political risk insurance through a broker. Brokers assist in comparing policies across insurers and tailoring coverage to specific operational needs. These policies are often structured as multi-year contracts, making customization important.
Costs vary by industry and exposure. The NAIC indicates that premiums are generally around 1 percent of the policy’s coverage limits per year.
Assessing Broader Insurance Needs
Insurance requirements differ across industries and operations. Evaluating coverage begins with understanding business dependencies, particularly supply chains.
Woosley suggests that businesses assess where they source materials, how disruptions would affect production, and whether alternative suppliers are available. He also highlights the importance of evaluating cost differences and potential downtime if sourcing changes.
Once risks are identified, businesses can consider additional types of coverage.
Business Interruption and Business Owners Policies
Business interruption insurance reimburses lost revenue following a covered event, such as a fire that renders a property unusable. This coverage is commonly included in a business owner’s policy (BOP), which combines property and liability insurance.
Many insurers offer BOPs designed for ease of access. Some providers offer fully online purchasing experiences and serve a wide range of industries. Others provide coverage options tailored to larger businesses, including companies with up to $30 million in annual revenue.
Coverage Selection Depends on Operations
Insurance solutions vary depending on a company’s structure, supply chain, and exposure to domestic or international risks. Political risk insurance represents one option among several, and its relevance depends on how a business operates within the global economy.
Understanding operational dependencies and evaluating potential disruptions remains central to selecting appropriate coverage.
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