Before he left for a recent business trip to Lagos, Nigeria, Jay Libove had a thought: What if things took a turn for the worse? Specifically, did he need kidnapping insurance for travel?
“I read the statistics, from various major countries’ foreign offices, departments of state, and travel advisories,” he says. The U.S. State Department has a warning for Nigeria, noting problems with “crime, terrorism, civil unrest, kidnapping and piracy.”
Even though Libove was working in a safe area as a risk consultant, he decided to take out kidnapping and ransom insurance — also called K&R insurance — to protect himself against a potential abduction, “mainly so that my family would have something to hang on to in the 0.00001% case that something might have happened to me,” he says.
If you travel to certain parts of the world, you could be a target. That’s why you might need kidnapping insurance for travel. Although exact numbers on kidnap-for-ransom cases are difficult to find, we know that they happen, and where they are most likely to happen. Islamist militant groups, guerrilla groups, and militias in countries such as Syria, Mali, Libya, Yemen and Colombia are behind most kidnappings, according to Control Risks, a security firm. Somali pirates also conduct some kidnappings at sea.
“Any traveler who is venturing to or doing business in an area of the globe that is a known hotspot for civil unrest, economic instability or recent clashes between citizens and law enforcement or the military should consider securing kidnapping, ransom and terrorism insurance,” says Rajeev Shrivastava, CEO of VisitorsCoverage.com, a travel insurance site. “K&R coverage is a must for any corporation doing business in Africa, the Middle East, Indonesia and Mexico.”
What is K&R insurance, and do you need kidnapping insurance for travel?
Kidnapping and ransom insurance offers three key areas of coverage:
- A high payment amount for ransom, extortion or hijacking demands to ensure the safety of the victim or victims.
- Coverage for emergency evacuation from remote or dangerous areas
- Payment for negotiations with the abductors and delivery of the ransom or extortion monies by trained experts to ensure the safety of the victim or victims.
“These trained experts know how to secure proof of life, when to call the police — and when not to, due to corruption — and how to negotiate with terrorists and kidnappers to ensure the return of the captive goes smoothly,” says Shrivastava.
One of VisitorsCoverage.com’s most popular kidnap and ransom policies covers injury, death and funeral expenses resulting from an incident, public relations services for high-profile cases, psychiatric treatment, medical and legal advice and reward payments. It also offers unlimited expenses for a crisis response team certified by the Department of Homeland Security.
“This type of coverage is fairly standard for corporate travel to hotspots but also critical for missionary or human rights groups who are traveling for humanitarian reasons,” he says.
Who should get kidnapping insurance for travel?
Is kidnapping insurance worth the expense? It can be, says Damian Caracciolo, a vice president at CBIZ Insurance Services, in Columbia, Md.
“Any business whose directors, officers or employees travel abroad or who have offices overseas, should consider kidnapping and ransom insurance,” he says.
And that’s just for starters. Other K&R insurance candidates include:
- Schools and universities, especially those with day care facilities and those that have study abroad programs.
- Financial institutions.
- Healthcare facilities (particularly for child abductions)
- Non-profit organizations that work abroad and non-government organizations.
- Entertainment companies.
- People with a high net worth or a high profile.
Does travel insurance cover kidnapping?
Some conventional travel insurance plans offer kidnapping and ransom coverage, but the amount of insurance averages between $5,000 and $10,000, which may not be enough. Experts say the minimum ransom coverage should be $50,000, with $1 million appropriate for some individuals. For businesses and corporations, $1 million to $10 million is the minimum, depending on the value of a business or the net worth of the abductee. A standalone K&R policy will offer this type of coverage.
“Most trip insurance companies are not a K&R provider,” says Phil Sylvester, a spokesman for WorldNomads.com, a travel insurance provider. “They won’t send in an extraction team, they won’t pay ransom. If you are injured during a kidnap your plan will cover medical expenses, and if the kidnap results in lost prepaid travel sectors the cancellation and delay cover will apply.”
That’s one reason why travelers should also ensure that they have a solid medical and trip travel insurance policy to cover emergency medical situations, flight cancellations and other travel mishaps. Those benefits are often available under a “duty of care” insurance policy for employees.
What’s excluded from kidnapping insurance?
K&R insurance also has some limitations.
- Limits in coverage. Kidnapping insurance has limits for ransom amounts as well as other benefits. Check with your insurance company for details.
- Geographic exclusions. Many K&R policies kick in on the specific days you’re traveling outside of the country of your permanent residency. Some policies provide coverage for a maximum number of days, while other policies are based on the number of days of travel for each trip.
- Political considerations. K&R coverage generally doesn’t apply if the United States has imposed sanctions on a country, such as North Korea or Iran. Ask your travel insurance company before going to a country where you’re unsure of coverage.
How much does kidnapping insurance for travel cost?
The cost of a kidnapping and ransom policy can vary. If it’s part of your travel insurance policy, you don’t have to pay extra for it. Businesses with employees who travel to dangerous areas frequently have K&R coverage as part of their corporate insurance portfolio. Some policies are available for less than $1,000, but the rate will depend on the type of coverage, where you’re traveling and other benefits.
Using kidnapping coverage for travel
Libove, the security consultant, decided to buy coverage for his trip to Nigeria.
“It was a pure formality which I purchased because the client was willing to pay for it,” he says. “In fact, it was a great trip.”
For a vast majority of business travelers, that’s how the trip ends: safe and incident-free. But if something had happened to Libove, he would have had the help of a professional negotiator, a team of security specialists and the resources to pay a kidnapper, if necessary. So you might consider this specialized insurance if you are going to visit a country where kidnapping is prevalent.