Kidnap and Ransom insurance is Good Risk Management

The company you work for may be engaged in international business affairs, requiring employees or executives to travel to Mexico, the Middle East or other hot spots. If you haven’t done so, you would be well advised to invest in kidnap and ransom (K&R) insurance, as the need for this type of coverage is increasing.

These unique indemnity policies are primarily tailored to reimburse companies traveling to areas of concern for million-dollar ransom payments should one of your workers be kidnapped, hijacked or fall victim to a terrorist attack.

What the insurance covers

While K&R insurance is structured to address a company’s exposure and liability if an employee is kidnapped, it often additionally covers losses due to extortion, cyber extortion and terrorism. Individual policies are available, though their cost makes them most suitable for high-profile entertainers, musicians, sports stars and other likely kidnap targets.

In addition to reimbursing the insured company for any ransom it pays, K&R business insurance typically picks up the costs of:

  • A professional crisis management team and negotiator to resolve the event
  • A public relations team to protect the company’s image
  • Property damage, including misuse of proprietary information
  • Reward payments for information leading to resolution
  • Legal defense, in case a kidnapped employee sues
  • Travel expenses, and
  • Reimbursement for a lost ransom or extortion payment

In addition, the kidnap victim could expect, depending on the plan, coverage for medical, cosmetic, dental, rehabilitation and psychiatric care, as well as loss of income, personal financial loss, child care, and, in a worst-case scenario, funeral expenses.

A major caveat to having kidnap and ransom insurance coverage is the psychological counseling, which is extremely helpful in the event that an individual, or a group of workers have been held captive for five years or even longer. When someone comes out of captivity of that length of time, he or she will really benefit by going to extensive psychiatric counseling.

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