Before we go into this topic, it is important to know how kidnapping for ransom is a chronic and serious problem around the globe. This is because they are quite lucrative for the responsible perpetrators of this offense and illegal act. Nonetheless, kidnap and ransom insurance, also known as K&R insurance, is presumed to save people and their fortunes when such issues arise.
In other words, you will not have to give up everything you have to protect your family. However, this type of insurance is not for everyone. There are tons of important factors that you need to consider before purchasing kidnapping insurance. You also need to understand how it works, what it covers and doesn’t, and how much it costs to get a quote.
What is Kidnap and Ransom Insurance?
Kidnap and ransom insurance is a type of insurance created to offer protection to individuals or corporations against financial losses related to illegal detention, kidnapping, extortion, and ransom demands.
What’s more, this type of insurance is usually searched for by travelers or people who are working in industries or high-risk areas that are prone to threats like that. Apart from that, kidnap and ransom insurance also cover legal fees, medical care, expenses associated with crisis management, and more.
How Does It Work?
Kidnap and ransom insurance usually involve a compensation system. For example, if a covered peril takes place, the insured party or policyholder will pay the ransom and other expenses involved in the extortion or kidnapping, and then the insurance company or provider will reimburse these costs based on the terms and conditions of the policy.
Additionally, the insurance company also offers security professionals who can help handle the situation safely and carefully and offer crisis management services as well.
What Does Kidnap and Ransom Insurance Cover?
Just like other insurance types, kidnap and ransom (K&R) insurance covers certain risks and events. Here are some of the threats that you can receive comprehensive coverage for:
- Accidental death or dismemberment.
- Medical care.
- Loss of income.
- Additional expenses.
- Crisis management and negotiation costs.
- Ransom payments.
- In-transit delivery.
- Legal liabilities.
However, keep in mind that the coverage you receive also depends on the insurance company you choose.
What Does It Not Cover?
There are exclusions to K&R insurance, even though it offers wide coverage. Here are some of them:
- Illegal activities.
- Fraud.
- Nuclear, biological, chemical, and radiological events.
- War and civil war.
Nonetheless, remember that the insurance provider you choose can also affect the exclusions of a policy.
Who Needs a Policy?
As mentioned previously, K&R insurance is not for everyone. Certain people need to consider this type of insurance. They include the following, so keep reading to find out if you fall under this category:
- Public figures and celebrities.
- Employees working abroad.
- NGO Workers.
- Journalists and media personnel.
- Financial institutions.
- High-net-worth/rich individuals and their families.
- Educational institutions.
- Publicly traded international companies.
How Much Does Kidnap and Ransom Insurance Cost?
The average cost of some kidnap and ransom insurance is $500 per year, but the price changes quickly and constantly. Factors that can affect the cost include the following:
- Type of coverage.
- Destination country.
- Number of people covered.
- Benefit amounts.
- Policy limits.
What’s more, the premium costs can range from a few hundred to several thousand dollars per year. However, high-risk organizations and individuals operating in high-risk areas will come across higher premiums.
How to Get Kidnap and Ransom Insurance
To get a kidnap and ransom insurance policy, here is what you need to do:
- Assess Your Risk: Evaluate your or your institution’s risk exposure depending on the nature of work, location, and other factors.
- Talk to a Specialist Broker: Kidnap and ransom insurance is a special field, and working with or partnering with a professional broker in this area can help you find the right coverage.
- Select the Right Policy: It is important to consider the coverage details, policy limits, and exclusions to make sure it meets your risk assessment.
- Undergo Risk Management Training: Some insurance companies may need or suggest security and risk management training for guaranteed individuals or groups.
- Application and Underwriting: The insurance company will assess and evaluate your risk and suggest a premium.
Frequently Asked Questions
Is Kidnap and Ransom Insurance legal?
Yes, K&R Insurance is legal and is a recognized form of risk management used by individuals and organizations worldwide to reduce the safety and financial risks that come with kidnapping events. However, it is important to manage this type of quote discreetly to avoid increasing the risk of becoming a target.
Can you negotiate the terms and coverage of Kidnap and Ransom Insurance?
Yes, potential policyholders can negotiate terms and coverage with insurance providers, often with the help of specialized brokers.
Why is discretion important when it comes to kidnapping and ransom insurance?
Discretion is important to avoid making the policyholder an interesting prey for kidnappers. Having an idea of K&R policy can increase the risk of kidnapping or extortion, as offenders may see the policyholder as an assured source of payment.
