What is kidnap and ransom insurance?

If your company sells employees abroad, then you might want to consider purchasing kidnap and ransom insurance. A kidnap and ransom policy (K&R) basically provides coverage in the event of a kidnapping. A typical K&R policy provides kidnap and ransom coverage. Most policies insurance ransom money while it's in transit. This also includes payment of security company fees.

Extortion coverage is usually included in a typical K&R policy, as well. This coverage basically protects from threats against company property, computer systems and contamination of products. The final coverage that the K&R policy provides is expense reimbursement. This includes travel expenses for family members, the kidnapped employee and security consultants. It also covers the legal services and the abductee's lost salary.

John Coonan, vice president and deputy of U.S. operations at Chubb Executive Risk, claims, "When you have a disaster such as kidnapping or extortion, what you really need is instant help.'

According to the Insurance Information Institute, kidnapping is on a rise, yet only 60 percent of Fortune 500 companies, carry kidnap and ransom insurance. Between 1995 and 1999, kidnapping totals worldwide grew more than 100 percent.

Do you need this coverage? If your employees frequently travel overseas, you probably do need K&R insurance. Demers of Travelers claims, "A lot of smaller companies don't realize the exposures they face. You don't find many companies without, say, fire insurance, but you do see a lot who never buy kidnap and ransom insurance'.

If your company constantly travels overseas to the following countries, then you should consider purchasing K&R policies because they are the top 10 countries in total kidnappings:

1. Brazil
2. China
3. Colombia
4. El Salvador
5. India
6. Malaysia
7. Mexico
8. Philippines
9. Russian Federation
10. Venezuela

Kidnapping and ransom insurance is really important to purchase for companies who have frequent business travels. Contact your insurance company and see how much K & R insurance is going to cost you.