What Does Expropriation Insurance Mean?
Expropriation insurance is an insurance coverage against foreign country expropriation or when a host country confiscates the investment of a foreign financial institution or company. Also called political risk insurance, this type of insurance covers the losses due to political risks such as political violence (including civil unrest, terrorism, war and revolution), expropriation, governmental repudiation of contracts, trade credit exposures, inability to repatriate funds, and other forms of business interruptions. This type of insurance is crucial for companies that have established several offshore branches.
Insuranceopedia Explains Expropriation Insurance
Political upheavals can cause assets to decline in their value or be confiscated. This type of insurance protects organizations and entities them against the possibility of the government taking action that causes the insured organization to experience massive financial loss.
Without a political risk insurance, businesses will have second thoughts on operating in a particular country because they fear the risk involved during a political unrest. Aside from multinational companies, entities such as banks, exporters, and infrastructure developers can take advantage of this insurance. The policies are also customized to meet the needs of clients. Thus, you can set the coverage amounts to millions of dollars over a longer period of time.