What is 'Kidnap Insurance'

Kidnap insurance is a kind of insurance coverage designed to protect individuals from the risk of kidnapping.

BREAKING DOWN 'Kidnap Insurance'

Kidnap insurance often covers other events related to kidnapping, including extortion. Kidnap insurance may often be bundled with protection for several other related perils, so sometimes it is offered as “kidnap and ransom insurance,” known as K&R insurance, or as “kidnap, ransom and extortion insurance.”

In the case of a kidnapping, the policy holder is compensated for money paid as ransom, medical expenses, counseling or for accidental death of the kidnap victim. They may also be reimbursed for the cost of security services, loss of revenue and fees related to publica relations or crisis management services.

Kidnap insurance is more likely to be used for individuals or companies operating in high-risk areas. These areas tend to have higher rates of crime and a history of kidnapping workers employed by multinational firms. Some of the common high-risk areas include Nigeria, Haiti and Venezuela. Certain industries may also be considered to post a higher risk, such as oil and gas companies, government contractors, maritime operations and even television and movie production companies.

Kidnap Insurance: Not So Uncommon

Kidnap insurance may sound unusual or exotic, but with so many companies now operating in a global marketplace and doing business in far-flung locations, it isn’t such a novel idea.

Some scenarios that may be addressed specifically with a kidnap insurance policy would include child abductions, hijacking, hostage situations and wrongful detention.

For employers with global operations that require workers to have a physical presence in dangerous areas or to engage in risky situations, maintaining coverage such as kidnap insurance is a way for the business to fulfill their “duty of care” obligations. This is a group of legal and moral responsibilities dictating that an employer must take steps to ensure their workers do not suffer any harm. As part of this type of policy, many insurers also provide services designed to help lessen the risk. These services might include training related to threat assessment, personal security awareness and crisis management.

Recently, some insurance companies have begun offering a specific, high-tech type of coverage known as cyber extortion coverage. This type of coverage can help with costs associated with assessing and preventing cyber threats, along with investigations to evaluate the risk of cyber threats. With the growing incidence of ransomware and other cyber attacks, this type of protection is very appealing to individuals and businesses, particularly those that handle sensitive, valuable or private data.  

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