Insurance 101: Kidnap and ransom insurance

August 24, 12:25 PMInsurance Industry ExaminerDanny Workman

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Kidnap and ransom insurance (K&R Insurance) is specialty coverage that protects both corporations and individuals operating in dangerous countries. High-risk nations include Indonesia, Mexico, Nigeria, Somalia and Venezuela.

K&R policies do not pay money directly to kidnappers or extortionists. Instead, K&R coverage reimburses insured parties for payments made to satisfy the demands of kidnappers and extortionists.

According to specialty risk insurance brokers KidnapRansom.com, K&R Insurance also indemnifies delivery expenses, legal settlement costs, as well as death and dismemberment claims on insured lives.

Examples of other reasonable and necessary expenses that some K&R Insurance policies cover range from consultant fees, forensic analysis, interpreter services, loan interest, medical costs, personal financial loss, rest and rehabilitation, travel and accommodation to rescue rewards and salary expenses.

Freelancers at mercy of kidnappers and extortionists
A freelance Canadian journalist, Amanda Lindhout, was abducted at gunpoint on a road near the Somali capital of Mogadishu on August 23, 2008. After more than a year of enduring daily mistreatment, scarce food and bad water, 28-year-old Lindhout was last heard in a phone call broadcast on Canada’s Omni TV on August 4.

Amanda Lindhout says that she is kept in shackles in a windowless room and suffers from an abscessed tooth, fever and painful inflammation of the lower digestive tract complicated by severe diarrhea.

Daniel Clayton, CEO of risk-management firm Diligence Ltd, reports that he knows the location where Lindhout is imprisoned and has the cellphone number of the Somali bandits holding her. The kidnappers are purportedly demanding a $1-million ransom.

So far, the Canadian government has failed to take the necessary steps to win the kidnap victim’s release. According to Clayton, part of Lindhout’s problem is that she is a freelance journalist who willingly went into a war-ravaged country when the Canadian government had advised her not to go.

Amanda Lindhout’s horrifying story may turn into one of the most compelling examples of why individuals have to buy their own Kidnap and ransom insurance before visiting dangerous countries like Somalia.

Sources: Amanda Lindhout website and Free Amanda Lindhout online petition.