Kidnap and ransom insurance covers the costs associated with extortion or kidnapping, including ransom, injuries, and death. It is commonly used in high-risk areas and industries where employees are perceived as financially superior. The insured must pay upfront, but the insurance company can claim the money later.
Kidnap and ransom insurance is a type of insurance that covers companies or individuals for all costs associated with extortion or kidnapping. In general, any ransom must be paid by the affected people when the situation arises, and then the insurance provider can claim the money. Kidnap and ransom insurance also covers injuries and death as a result of kidnapping and ransom.
Kidnapping can occur when a significant other travels into a high-risk area and is targeted by a gang. The individual will be kidnapped and held for ransom, which means that the kidnappers will ask for a certain amount of money in exchange for the victim’s release. This is when kidnap and ransom insurance comes into play. The only way to get the safe return of the employee or family member is to pay the criminals the money. This basic extortion has given rise to the idea of kidnap and ransom insurance.
As with most insurance policies, kidnap and ransom insurance works on the indemnity principle, which basically states that the insured must be reimbursed for losses incurred. Most kidnap and ransom insurance policies will cover the costs of ransom, injury or disability to the captured individual, the fees of crisis management experts, and death. Some policies will also cover ransom payments that are lost in transit to the kidnappers.
Identified high-risk areas where kidnapping occurs include Latin America, Africa, Asia, and the Middle East. Many of the affected countries are places where companies must send employees. Some companies choose to get the insurance policy because it costs less than having to pay a ransom for an employee, should the situation arise.
Hijackers could attack many different types of companies. Industries that are particularly at risk include finance, oil, gas, mining, telecommunications and pharmaceuticals. Any higher level employee working within these industries is considered worth kidnapping due to their perceived financial superiority.
While kidnap and ransom insurance can save companies in the long run, they usually have to pay the costs upfront. The money is usually claimed by the insurance company after the event, which can still leave some companies in a very difficult situation. Although the costs will be compensated, the company will have to secure the funds to pay the ransom without help initially.
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