Expropriation Insurance
What Does Expropriation Insurance Mean?
Expropriation insurance, also known as political risk insurance, provides coverage against the risk of a host country seizing or expropriating the investments of a foreign company or financial institution. This insurance protects against losses arising from political risks such as political violence (including civil unrest, terrorism, war, and revolution), expropriation, government contract repudiation, trade credit exposures, restrictions on fund repatriation, and other forms of business disruption. This type of insurance is essential for companies that operate multiple offshore branches.
Insuranceopedia Explains Expropriation Insurance
Political upheavals can lead to asset devaluation or confiscation. Political risk insurance protects organizations from potential government actions that could result in substantial financial losses.
Without political risk insurance, businesses may hesitate to operate in certain countries due to the risks associated with political instability. This insurance is beneficial not only for multinational corporations but also for banks, exporters, and infrastructure developers. Policies are often customized to meet client needs, allowing for coverage amounts in the millions and extending over longer periods.
