Introduction of K&R

Kidnap & Ransom insurance is a specialist product as it not only involves payment of claims, it also involves far more complicated and sensitive matters such as negotiation with the kidnappers for the release of the hostages. This insurance is usually placed by the owner (as assured) while the charterer may need to pay for the premium, according to the charterparty terms. Please kindly find below the detailed information about its coverage:

1. Ransom which has been surrendered; in the case of marketable goods or services, Underwriters shall pay the actual cash value thereof at the time of surrender.

2. The loss in transit of a ransom by actual damage, destruction, disappearance, confiscation, seizure, theft or wrongful abstraction while being conveyed to the order of such persons as have demanded it by any person who is duly authorised to do so by the assured or an insured person.

3. The fees and expenses of Control Risks or, with the prior approval of underwriters, other independent crisis management consultants.

4. Additional expenses, being expenses necessarily incurred following, and for the duration of, an insured event by the assured or the insured person(s) and which shall comprise:

• fees and expenses of an independent negotiator engaged by the assured with the prior authorisation of underwriters;
• fees and expenses of an independent public relations consultant, or interpreters;
• reasonable costs of travel and accommodation incurred by the assured or an insured person;
• the cost of travel of a kidnap victim and his family to the country of which the victim is a national and the travel costs of a replacement of a kidnap victim and his family to the country in which the kidnap occurred. These costs shall only apply once per insured person per kidnap;
• fees for independent psychiatric care, medical care, legal advice or other related professional support services incurred prior to the release and within thirty six months following the insured event;
• reward paid by the assured or an insured person to an informant for information which directly assists the assured or an insured person in their negotiations and/or assists to obtain the safe release of a kidnap victim or which leads to the arrest and conviction of parties responsible for an insured event;
• personal financial loss;
• kidnapped insured person’s gross salary, including bonuses, commissions, cost of living adjustments, foreign tax reimbursements, pension and/or welfare contributions and allowances which were contractually due or could reasonably be expected based on past performance at the time the insured event occurs and for 60 days following the victims release;
• the costs incurred by the assured for the salaries of employees specifically designated to assist in negotiating on any insured event, not to exceed the employees base rate of pay. Plus all other reasonable expenses solely and directly incurred in connection with such negotiations, provided that the assured forwards an itemised account of such employees time, services and expenses;
• the cost and expense incurred in retraining an insured person following their release from a kidnapping. Underwriters will also pay the insured person’s salary during such retraining;
• sums payable by way of interest on loans raised specifically to meet an Insured Loss and in respect of amounts subsequently reimbursed hereunder, provided the loan is repaid within seven days of the assured receiving reimbursement of the same from underwriters;
• costs, fees and expenses of temporary security measures solely and directly for the purpose of protecting insured persons located in the country where an insured event has occurred and on the specific recommendation of Control Risks;
• costs of communication equipment, recording equipment and advertising incurred solely and directly to obtain the release of a kidnapped insured person;
• reasonable fees and expenses of independent forensic analysts engaged by the assured;
• reasonable rest and rehabilitation expenses including meals and recreation incurred by the kidnap victim and a spouse and/or children incurred within 18 months following the release of the kidnap victim;
• the reasonable costs of cosmetic or plastic surgery which is required to correct any permanent disfigurement sustained by an insured person solely and directly as a result of an insured event;
• the reasonable cost of getting any ransom to the perpetrators of the kidnap;
• all other reasonable expenses incurred following, and for the duration of an insured event, by the assured or insured person(s) with the underwriters prior approval.

5. Legal Liability, being settlements or awards, fees and judgements imposed upon and paid by the assured as a result of an action for damages brought by or on behalf of any insured person(s) or his or their legal representative or shareholders solely and directly as a result of a kidnap. However:

• the assured shall neither admit any liability for, nor settle, any claim, nor incur any costs or expenses without the prior written agreement of underwriters;
• underwriters shall have the right to defend any such suit against the assured and may make whatever investigation and settlement of any claim or suit they deem expedient and the law allows, and the assured shall co-operate fully with underwriters in all things in connection therewith.

Defence costs incurred by Underwriters, or with their prior written agreement, are payable in addition to the limit for Legal Liability. However, if the total amount for all settlements, awards and judgements to which such costs refer exceeds this limit, this Policy shall pay only that proportion of defence costs which the limit bears to the total of such settlements, awards and judgements.