As terrifying as it may be, kidnapping for ransom is a highly lucrative occasion for the masterminds behind the crimes. Not everyone needs kidnap & ransom insurance to protect their employees, but for those who have high profile lives, have significant status, or who are traveling outside of the United States, this insurance can be a form of financial protection in the event a ransom needs to be paid. You must know how the details of this coverage before deciding if it is right for you.
What Is Kidnap and Ransom Insurance?
Most commonly, Americans associate kidnapping with overseas travel or residencies in foreign countries. While an indicator for kidnap risk has been added to federal travel advisories back in 2019, it is possible that those who maintain celebrity status or who are wealthy can fall victim to a kidnap plot here in the United States. Overseas, it’s those professionals, aid workers, journalists, tourist and business people and their families who are often prime targets. Kidnap and ransom coverage is suggested if you fall into one of these categories.
Insurance coverage for kidnap and ransom situations can be taken out as a stand-alone policy or offered through a corporate insurance portfolio. This is often the case if employees are frequently required to travel overseas where kidnapping is a significant threat. K&R insurance can be extended to cover spouses, children, guests, relatives, housekeepers, nannies, and more. When purchased as a stand-alone coverage, it is usually done by politicians, celebrities, famous athletes, or other affluent individuals.
How Does K&R Insurance Work?
For the bulk of kidnapping situations, a perpetrator will demand that the victim avoid contacting law enforcement or any other third party. This can be problematic, especially when the employer needs to reach out to the insurance company. Through a special provision in many K&R policies, the policyholder is able to notify both the insurer and police about the incident when it has been deemed safe to do so. Once the insurer receives the call, specialists are deployed to aid in the release of the individual. The assistance could include delivery of the ransom, negotiations with the perpetrators, evacuation, and care of the victims.
The insurance policy doesn’t directly pay the ransom. The victim’s employer must front the money, and once the crisis is over, the insurer issues reimbursements for both the ransom money and any related expenses up to the specific limit of the policy. Expenses or coverage eligibility usually includes the ransom payment, lost income, medical care, interest on loans, crisis management support services, business interruption, and potentially public relations expenses.
As a general precaution, if a country has been listed on the State Department’s travel advisory map, you should avoid your employees traveling to these countries. Failing to heed the warning may result in ineligibility of your kidnap and ransom coverage should an incident occur.
About The Hilb Group
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (800) 776-3078 for a consultation.