Political risk insurance

From open-encyclopedia.com - the free encyclopedia.

Political risk insurance can be taken out by businesses, of any size, having operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

Political risk insurance is available for several different types of political risk, including (among others):

• Political violence, such as revolution, insurrection, civil unrest, terrorism or war;
• Governmental expropriation or confiscation of assets;
• Governmental frustration or repudiation of contracts;
• Wrongful calling of letters of credit or similar on-demand guaranties; and
• Inconvertibility of foreign currency or the inability to repatriate funds.

As with any insurance, the precise scope of coverage is governed by the terms of the insurance policy.

While political risk insurance policies are sometimes manuscripted for specific situations, the major political risk insurers have standard forms for the coverages that they issue.