Kidnap and Ransom Insurance (K&R)

Definition - What does Kidnap and Ransom Insurance (K&R) mean?

Kidnap and Ransom insurance is an indemnity policy that compensates for the financial loss an individual suffers when he or she becomes a victim in a kidnap for ransom situation. Compensation usually extends to medical expenses for injury and damage brought about by the same situation.

Insuranceopedia explains Kidnap and Ransom Insurance (K&R)

Kidnap for ransom is a crime that is mostly targets rich and famous people as well as individuals who travel frequently to a foreign country as part of their job. These are the people most likely to purchase the kidnap and ransom insurance (K & R insurance).

It is important to note that the insurer reimburses money paid for ransom and does not give it directly to the kidnappers. So, the policyholder or his or her legal representative pays the ransom first and files a claim with the insurer afterwards.

A provision present in this policy is secrecy. The policyholder cannot tell anyone about it. This is because the policyholder is likely to put themselves into a kidnapping and ransom situation if knowledge of such a policy reaches the perpetrators of this type of crime. This provision often leads to a confusing situation where even a policyholder does not even know that he or she owns such a policy.

For instance, employees may not know that their company bought K & R policies for them since the company is following the obligation of non-disclosure.The policyholder is not covered if he or she figures in a kidnapping incident in a country where his or her government has issued a travel sanction.

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