Kidnap and Ransom Insurance (K&R)

Kidnapping for ransom and extortion can happen to anyone. A chronic problem in many countries, it is a very lucrative crime for many as well. Whether the grudge is against you, your employees or a threat against the company itself, kidnapping for ransom or an extortion situation is stressful and can be financially devastating.

Kidnap and ransom insurance coverage, also known as K&R insurance, provides compensation for money paid to resolve a kidnapping/extortion, as well as any other fees and expenses incurred during the situation. It also provides coverage for the loss of ransom money while in transit.

How Does Kidnap and Ransom Insurance Work?

In a kidnap and ransom situation, whether it involves child abduction, express kidnapping, a hostage crisis, or the ransoming of registered trademarks or other intellectual property, most crime perpetrators demand that you not notify the police. This can make it difficult to secure money and assistance.

Most K&R insurance products provide for this situation, stating that the policyholder is not required to notify the insurance company or the police until it is safe and will not be penalized for waiting.

Once the insurance company has been contacted, insurance specialists help secure the release of the kidnapped individual or individuals. This assistance may include:

  • Negotiating with the kidnappers or extortionists
  • Delivering the ransom
  • Evacuating the kidnapped individual(s) or hostages
  • Caring for the victims and their loved ones

The kidnap and ransom insurance does not pay the money directly. The family or employer pays the ransom - either out of pocket or by taking out a loan. Once the crisis is resolved, the insurer will reimburse the money to the policyholder, including any interest on money that has been borrowed.

What Does a Kidnap and Ransom Policy Cover?

A basic kidnap and ransom policy usually covers the ransom payment, plus any loss of income or medical care stemming from the crisis. As mentioned above, interest on any loans accrued because of the situation is typically covered.

For businesses, K&R policies may also cover business interruption, the cost of crisis management consultants, and any other support services, including public relations. K&R insurance also covers legal costs, including lawsuits brought by the victims against the company.

Kidnap and ransom insurance policies also cover:

  • Injuries
  • Travel expenses
  • Reward money
  • Damages from terrorism, extortion, or wrongful detention
  • Funeral expenses

Considerations with K&R Insurance Policies

If you travel to a restricted country, your kidnap and ransom insurance may not cover you in the event of a kidnapping or ransom crisis. Your insurer can answer your questions and provide access to global security experts who can advise where to travel and how to safely visit dangerous areas.

Most K&R insurance policies require you as the policyholder to consent to non-disclosure. This means that you cannot discuss the policy, even its existence, with anyone. Talking about your policy with anyone raises your risk of actually being kidnapped and will likely void your policy.

We at Vetinsure have been exclusively serving the veterinary industry since 2008. We offer customized insurance coverage and risk management solutions to protect your finances from the impact of crime and litigation. For more information or a consultation, give us a call today.