Why it matters for your company
Insurers exclude government use because the claims environment differs and because defense work carries risks their pricing never contemplated. The exclusion can reach a drone sold to a municipality as easily as one sold to a military unit, depending on how government is defined.
Companies with a first defense contract should read for it before signing, since contract insurance clauses assume the policy responds (specialty broker's deep tech page, accessed 2026-09-12). The fix is usually an endorsement or a separate product liability placement with an insurer that writes government work.
Related terms
- ITAR exclusionA policy clause that removes or limits coverage for products, data or services controlled under the International Traffic in Arms Regulations. It appears on liability and property forms written for commercial risk.
- ExclusionA clause that removes a type of loss, activity or property from what a policy responds to. Exclusions sit in the base form and in endorsements, and at claim time they decide the outcome more often than the coverage grant does.
- Product liabilityLegal responsibility for injury or damage caused by a product you designed, made, sold or distributed. In insurance it is answered mainly by the products and completed operations part of general liability.
- EndorsementA page attached to a policy that changes it: it adds coverage, removes it, names a new party, or rewrites a definition. The endorsement controls over the base form wherever the two disagree.