Financial & Special Risk Insurance
Political Risk Insurance (Political Violence and Sabotage & Terrorism (SAT)
Political Risk Insurance (PRI) protects businesses and investors against losses resulting from political violence, sabotage, and terrorism (SAT). This coverage is essential for companies operating in politically unstable regions or industries vulnerable to civil unrest, armed conflicts, and terrorist activities.
- Political Violence covers losses due to war, civil disturbances, riots, insurrection, revolutions, and coups.
- Sabotage and Terrorism (SAT) protects against damage or losses caused by acts of terrorism and deliberate sabotage targeting businesses, assets, or infrastructure.
Why is Political Risk Insurance (Political Violence and SAT) Essential?
- Protects Business Assets – Covers damage to physical assets like buildings, equipment, and inventory due to political violence and terrorism.
- Ensures Business Continuity – Minimizes financial impact and allows businesses to recover quickly from disruptions.
- Mitigates Investment Risks – Essential for multinational companies, infrastructure projects, and businesses in emerging markets.
- Compliance with Lenders and Investors – Many financial institutions require this coverage to protect loaned capital and investments.
- Global Expansion Security – Helps companies operate with confidence in politically unstable regions.
Important Things You Should Note
- Different from General Property Insurance – Standard policies may exclude political violence and terrorism. Specialized PRI is required for full coverage.
- Varies by Region – Coverage terms and risk assessments depend on the political environment of a specific country or region.
- Exclusions Apply – Not all political events qualify for coverage; policy wording is crucial.
What is Covered & What is Not Covered?
Covered Risks
- Physical damage to property due to riots, war, terrorism, or sabotage
- Business interruption due to political violence
- Losses from government expropriation or confiscation (depends on policy)
- Loss of revenue due to forced abandonment or political instability
Not Covered
- Cyberterrorism (unless specifically included)
- Political demonstrations without violence
- Losses due to economic downturns or financial instability
- Damage due to internal company disputes or labor strikes
Frequently Asked Questions (FAQs)
Who needs Political Risk Insurance?
Companies operating in high-risk regions, including infrastructure, energy, construction, and multinational corporations.
How is the premium determined?
It depends on the country risk level, industry, and exposure to political violence and terrorism threats.
Can PRI cover indirect losses like reputational damage?
No, it primarily covers physical and financial losses, not brand reputation.
Does this insurance cover cyberterrorism?
Generally, cyberterrorism is excluded, but separate coverage can be obtained.
Is there a waiting period before claims are paid?
Some policies may have a waiting period for business interruption claims, typically 30–90 days.
