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Special Crime Insurance

Special Crime Insurance


Special Crime Insurance — a type of insurance that covers losses arising from the kidnap and holding for ransom of a corporate employee or from the threat to do harm to a person or to certain property if a ransom is not paid. Accordingly, special crime policies are also termed "kidnap, ransom, and extortion" insurance. The policies generally cover some or all of the following perils: (1) kidnapping an insured person; (2) bodily injury (BI) extortion (a threat to kidnap, injure, or kill an insured person); (3) property damage (PD) extortion (a threat to damage or pollute property, tamper with the insured's product, or reveal a trade secret or other proprietary information of the insured); (4) wrongful detention (involuntary confinement of an insured person); or (5) hijacking. The categories of loss covered by the policies include ransom money payments; wrongful detention costs (costs of attempting to locate and secure the release of the victim); in transit/delivery expenses (for confiscation, disappearance, or destruction of ransom money during delivery); other expenses (reward payments to informants, interest on loans of ransom money, fees for security consultants); judgments, settlements, and defense costs (for lawsuits by a victim or victim's family alleging negligence on the part of the employer); and death or dismemberment payments (for a victim or insured person involved in handling the incident). Most policies impose separate limits for each of these categories of loss, as well as an annual aggregate limit. Special crime insurance can be included in a commercial crime policy, written on a stand-alone basis, or may be available as part of a management liability "package" policy.

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