Kidnap and ransom (K&R ) insurance is a specialty crime coverage that protects against financial losses that arise when an insured is threatened with kidnap, extortion or illegal detention domestically or abroad.
Insurance brokerage HUB International reports there are about 15,000 kidnap and ransom incidents around the world every year, leading to about half a billion American dollars in ransoms paid to criminals and their causes.
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. Typically, the insured must first pay the ransom, thus incurring the loss, and then seek reimbursement under the policy.
Losses typically reimbursed by K&R insurance include:
The policies 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. Even the most basic training for people traveling to dangerous places is not easily provided or is not obtained by small to mid-sized companies.