Should You Buy Kidnapping and Ransom Insurance?

Computer screen that says "security"; kidnapping and ransom insurance

What is kidnapping insurance?

Worst-case scenarios may not be at the top of your travel planning list. But for at least some destinations it may be prudent to insure against the unthinkable. Kidnapping and ransom (K&R) insurance covers the costs incurred in cases of kidnapping, extortion and wrongful detention.

According to a book profiling the industry, We Want to Negotiate by Joel Simon, kidnapping and ransom insurance was born in response to the tragic 1932 abduction of Charles Lindbergh’s twenty-month-old son. Yet it didn’t really take off until after a rash of kidnappings in Europe and Latin America in the 1960s.

What does kidnapping and ransom insurance cover?

There are three main components to kidnapping and ransom coverage:

  • A ransom payment high enough to keep abductees safe.
  • Emergency evacuation from dangerous areas.
  • Payment for trained negotiators and payment delivery experts.

Payment for trained negotiators is particularly important. In the industry’s early days, coverage was often limited to ransom payments alone. Accordingly, the negotiation was left to the parties involved.

With no experience it’s easy to understand how some distressed parties may have paid more than they should have. This, in turn, may have led the kidnapping victims to be targeted again. In one infamous case in 1983, the wife of a Hong Kong property tycoon paid $11 million for his return; in 1990 she paid another $60 million when he was kidnapped a second time.

Today, “policies covering K&R typically provide a specialist whose job it is to negotiate release of the insured,” according to the International Travel & Health Insurance Journal.

Why you might want kidnapping and ransom insurance

According to U.S. insurance brokerage HUB International, there are around 15,000 kidnapping and ransom incidents and approximately half a billion dollars paid in ransoms worldwide each year. However, that’s just the tip of the iceberg. Up to 70% of cases go unreported, mainly to avoid additional or repeat abductions.

And it’s not just top executives who are targeted. Instead, “Organized criminal groups much prefer kidnapping ‘soft’ targets. It’s the unprepared traveler who is at greatest risk,” according to Michael O’Halloran at Northcott Global Solutions. Just this past April, American tourist Kimberly Sue Endecott was abducted while on safari in Uganda; this led to a ransom payment in exchange for her freedom.

As Rajeev Shrivastava, CEO of VisitorsCoverage.com puts it, “Any traveler who is venturing to or doing business in an area of the globe that is a known hotspot for civil unrest or economic instability should consider securing kidnapping, ransom and terrorism insurance. K&R coverage is a must for any corporation doing business in Africa, the Middle East, Indonesia and Mexico.”

Do you need kidnapping insurance no matter where you go?

Portion of a colorful globe; kidnapping and ransom insurance

Risk varies by region and place, of course. Yet the threat exists on nearly every continent.

According to Control Risks, a global risk consultancy, in 2018 Latin America saw the largest share of the world’s kidnappings for ransom. This was followed by Asia and sub-Saharan Africa, then the Middle East and North Africa.

Kidnapping and ransom insurance vs. travel insurance

Travel insurance policies typically cover costs like flight cancellation fees and lost luggage. Many policies also cover emergency medical care and transportation during your trip.

Some travel insurance plans even offer kidnapping and ransom coverage. The amount of coverage, however, averages between $5,000 and $10,000. As consumer advocate Christopher Elliot writes in Forbes, “this may not be enough. Experts say the minimum ransom coverage should be $50,000, with $1 million appropriate for some individuals.” The amount of coverage needed for corporations should undoubtedly be greater, depending on the value of the business and net worth of the abductee.

Think of travel insurance, or other forms of coverage like accident insurance, as complementary to kidnapping and ransom insurance. Together, they cover both the inconveniences and true perils of travel.

How much does kidnapping and ransom insurance cost?

It varies. Certainly, if you are traveling on behalf of your employer, you may already have coverage through a corporate policy.

But remember, being unprepared or unaware brings the greatest risk. If you or your family are traveling for leisure or plan to combine a business trip with a vacation, you may also need your own kidnapping and ransom coverage. Some policies may cost $1,000 or less. The rate will depend on amount of coverage, where you’re traveling, for how long and the number of individuals covered.

Be prepared

Traveling abroad can certainly be a grand adventure and greatly rewarding. But it is not without risk. Preparing yourself with the right information and coverage can without a doubt make a critical difference if a nightmare does happen. Before you, your employees, or your family travel abroad next, make sure you have the coverage you need to stay safe.

About Hunter

California-raised. Globally amazed. Traveler, marketer, writer.

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