Kidnap and ransom insurance or K&R insurance is designed to protect individuals and corporations operating in high-risk areas around the world, such as Mexico, Venezuela, Haiti, and Nigeria, certain other countries in Latin America, as well as some parts of the Russian Federation and Eastern Europe. K&R insurance policies typically cover the perils of kidnap, extortion, wrongful detention, and hijacking.
K&R policies are indemnity policies - they reimburse a loss incurred by the insured. The policies do not pay ransoms on the behalf of the insured. The insured must first pay the ransom, thus incurring the loss, and then seek reimbursement under the policy. Losses typically reimbursed by K&R polices are ransom payments, loss-of-ransom-in-transit and additional expenses, such as medical expenses.
The policies also typically indemnify personal accident losses caused by a kidnap. These include death, dismemberment, and permanent total disablement of a kidnapped person. They also typically pay for the fees and expenses of crisis management consultants. These consultants provide advice to the insured on how to best respond to the incident.
The policies may be written to cover families and corporations. Some policies include kidnap prevention training.[6]
Criminal gangs are believed to make $500 million a year from kidnap and ransom payments.
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